STANDARD FORM

                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR

                              DEVELOPMENT AGREEMENT





                            ------------------------
                               (Name of Developer)


                            ------------------------
                                     (Date)



                            -------------------------
                        (General Description of Territory)


                                      E-1

<PAGE>



                               TABLE OF CONTENTS

RECITALS.................................................................    E-3

   1.  GRANT OF DEVELOPMENT RIGHTS.......................................    E-4
   2.  INITIAL DEVELOPMENT SCHEDULE......................................    E-5
   3.  SUBSEQUENT DEVELOPMENT SCHEDULE;
       DEVELOPMENT OBLIGATIONS GENERALLY.................................    E-6
   4.  FRANCHISE FEE AND ROYALTY RATE....................................   E-13
   5.  SITE APPROVALS:  PLANS AND SPECIFICATIONS.........................   E-15
   6.  FEES AND FRANCHISE AGREEMENTS.....................................   E-16
   7.  DEVELOPER ORGANIZATION, AUTHORITY,
       FINANCIAL CONDITION AND SHAREHOLDERS..............................   E-16
   8.  TRANSFER..........................................................   E-19
   9.  TERMINATION.......................................................   E-23
   10. PREREQUISITES TO OBTAINING FRANCHISES
       FOR INDIVIDUAL RESTAURANT UNITS...................................   E-24
   11. RESTRICTIONS......................................................   E-25
   12. DEVELOPMENT PROCEDURES............................................   E-27
   13. NO WAIVER OF DEFAULT..............................................   E-28
   14. FORCE MAJEURE.....................................................   E-29
   15. CONSTRUCTION, SEVERABILITY, GOVERNING
       LAW AND JURISDICTION..............................................   E-29
   16. MISCELLANEOUS.....................................................   E-30


APPENDIX A:   TERRITORY..................................................   E-33

APPENDIX B:   FORM OF FRANCHISE AGREEMENT................................   E-34

APPENDIX C:   STATEMENT OF OWNERSHIP INTERESTS...........................   E-35

APPENDIX D:   REVIEW AND CONSENT WITH RESPECT
              TO TRANSFERS...............................................   E-36

APPENDIX E:   CONFIDENTIALITY AGREEMENT AND
              COVENANT NOT TO COMPETE....................................   E-37

APPENDIX F:   CONFIDENTIALITY AGREEMENT..................................   E-40





                                      E-2

<PAGE>


                       APPLEBEE'S NEIGHBORHOOD GRILL & BAR
                              DEVELOPMENT AGREEMENT


This Agreement is made this ________ day of ___________________, 20_____, by and
between APPLEBEE'S INTERNATIONAL,  INC., a Delaware corporation  ("FRANCHISOR"),
________________________________________,  a (_______________  corporation, sole
proprietorship,  ______________________  partnership,  _________________ limited
partnership [strike inappropriate  language]) ("DEVELOPER") and ----------------
________________________________  (collectively,  the  "PRINCIPAL  SHAREHOLDERS"
and,  individually,  a "PRINCIPAL  SHAREHOLDER" of Developer if a corporation or
general  partner of  Developer  is a limited  partnership  having as its general
partner  a   corporation)   and   ______________________________________________
("GENERAL PARTNER") of Developer if Developer is a limited partnership).*

    * (If  Developer  is  not a  corporation  or a  sole  proprietorship,  or if
Developer is a limited liability  company,  the parties hereto hereby agree that
an Addendum  shall be attached to this  Agreement  so as properly to reflect the
responsibilities of the partners of any general partnership, the general partner
of any limited partnership and the shareholders of any corporate general partner
of any partnership, or the members of any limited liability company.)


WITNESSETH:

                                    RECITALS

    A.   Franchisor  owns the  rights  to develop and operate a unique system of
restaurants which specialize in the sale of high quality, moderately priced food
and  alcoholic  beverages  in  an  attractive,  casual  setting,  which  include
proprietary   rights  in  certain  valuable  trade  names,   service  marks  and
trademarks,  including the service mark Applebee's  Neighborhood Grill & Bar and
variations  of such  mark,  designs,  decor and  color  schemes  for  restaurant
premises,  signs,  equipment,  procedures  and formulae for  preparing  food and
beverage  products,  specifications  for  certain  food and  beverage  products,
inventory  methods,  operating  methods,  financial control  concepts,  training
facilities and teaching techniques (the "System").

    B.   Franchisor has  established, through its own development and operation,
and through the granting of franchises, a chain of Applebee's Neighborhood Grill
& Bar restaurants which are distinctive; which are similar in appearance, design
and decor;  and which are uniform in operation and product  consistency.

    C.   The value of Franchisor's  trade names, service marks and trademarks is
based upon: (1) the maintenance of uniform high quality  standards in connection
with the preparation and sale of Franchisor-approved food and beverage products,
(2) the uniform high standards of appearance of the individual  restaurant units
in the System, (3) the use of distinctive  trademarks,  service marks,  building
designs and advertising  signs  representing a uniformly high quality of product
and services,  and (4) the assumption by Franchisor  and its  franchisees of the
obligation  to maintain and enhance the goodwill  and public  acceptance  of the
System (and of Franchisor's trade names, service marks and trademarks) by strict
adherence to the high standards required by Franchisor.

    D.   Developer  desires to obtain the exclusive right to develop  restaurant
units franchised by Franchisor  within the geographic area specified in Appendix
A hereto ("Territory"),  for the period specified in Subsection 1.1, pursuant to
the terms, conditions and provisions which are set forth in this Agreement.

                                      E-3
<PAGE>

NOW,  THEREFORE,  in  consideration  of  Franchisor  granting to  Developer  the
exclusive  right to develop  restaurant  units  franchised by  Franchisor  which
employ the System  ("Restaurants")  in the  Territory  for such  period,  and in
consideration  of the mutual  obligations  which are provided for herein,  it is
hereby agreed as follows:

1.  GRANT OF DEVELOPMENT RIGHTS

    1.1  Franchisor grants Developer the exclusive right to develop  Restaurants
only in the Territory for a period commencing on the date hereof and expiring on
___________,  20__, unless sooner terminated as hereinafter provided.  Developer
has no rights  under  this  Agreement  to  develop  Restaurants  outside  of the
Territory or to develop  restaurants  which do not employ the System,  including
the Applebee's Neighborhood Grill & Bar service mark.

    1.2  During  the term of this  Agreement,  Franchisor  shall  not  operate a
restaurant  utilizing  the  System  or  license  any other  person to  operate a
restaurant  utilizing  the  System in the  Territory.  However,  nothing in this
Agreement  shall  prohibit  or  infringe  upon  Franchisor's  right to operate a
restaurant  or license any other person to operate a restaurant in the Territory
which does not utilize the System or use the Applebee's Neighborhood Grill & Bar
service mark. In addition, Franchisor specifically reserves the right to operate
or license any other person to operate  restaurants  in any  location  within an
airport  (serviced by one or more public or charter  carrier),  arena,  stadium,
state or national park, or military  fort,  post or base which may be within the
boundaries of the Territory otherwise granted to Developer.  Further,  Developer
acknowledges and agrees that Franchisor or any one (1) or more of its subsidiary
or affiliated  companies or divisions shall have the right to operate or license
any other  person to operate  such other  restaurants  which may or will compete
with the  Restaurants,  under a system and  service  mark other than  Applebee's
Neighborhood Grill & Bar.

    1.3  After  this Agreement  expires or is  terminated, Franchisor shall have
the complete  and  unrestricted  right to operate  or license  other  persons to
operate a restaurant utilizing the System in the Territory.


                                      E-4
<PAGE>

2.  INITIAL DEVELOPMENT SCHEDULE

    2.1  Developer  shall  develop  a  total  of  _________  (____)  Restaurants
franchised by Franchisor  in the Territory  during the period  commencing on the
date hereof and  expiring on  _____________,  20_____,  in  accordance  with the
following development schedule:

         (a)1 During the first Initial  Development Period under this Agreement,
    Developer  shall develop at least  _________  (___)  Restaurants  within the
    Territory,  each of which shall be open for operation and doing  business on
    _________________, ________ (the end of the first Initial Development Period
    under this Agreement).

         (b)  During the second Initial Development Period under this Agreement,
    Developer  shall  develop  the number of  Restaurants  within the  Territory
    necessary to result in the  existence of  _________  (___) such  Restaurants
    developed by Developer  which are open for operation  and doing  business on
    _________________,  ________  (the  end of the  second  Initial  Development
    Period under this Agreement).

         (c)  During the third Initial Development  Period under this Agreement,
    Developer  shall  develop  the number of  Restaurants  within the  Territory
    necessary to result in the  existence of _________  (____) such  Restaurants
    developed by Developer  which are open for operation  and doing  business on
    ______________,  ________ (the end of the third Initial  Development  Period
    under this Agreement).

Each of the periods  specified  in  Subparagraphs  (a) through  (___)  hereof is
sometimes referred to hereinafter as an "Initial Development Period."

    2.2  During  any Initial  Development Period, subject  to the  provisions of
this Agreement,  Developer is free to develop more than the total minimum number
of Restaurants   which  Developer is required to  develop  during  that  Initial
Development Period. Any such Restaurants developed, open for operation and doing
business  during an Initial  Development  Period in excess of the minimum number
required to be developed during that Initial Development Period shall be applied
to satisfy Developer's development obligation during the next succeeding Initial
Development Period or next succeeding Subsequent  Development Period (as defined
in Section 3 hereof),  if any,  as the case may be.  Notwithstanding  the above,
Developer shall not develop more than the total number  Restaurants  approved by
Franchisor for development under this Agreement.

    2.3  Strict compliance with the development schedule specified in Subsection
2.1 hereof is of the essence of this  Agreement.  If Developer  fails to fulfill
its  specified  development  obligation  with  respect  to any  of  the  Initial
Development  Periods  specified in Subsection 2.1 hereof,  this Agreement  shall
terminate  sixty (60) days after the end of the  Initial  Development  Period in
question,  unless  by the  end of such  sixty  (60)  day  period  Developer  has
fulfilled  the  development  obligation  relating  to such  Initial  Development
Period.

1 The periods  specified in  Subsection  2.1(a)-(c)  may be revised,  deleted or
added to in order to reflect the number of Restaurants Developer is obligated to
develop  and the  time  in  which  the  Developer  is  obligated  to  open  such
Restaurants.

                                      E-5
<PAGE>

3.  SUBSEQUENT DEVELOPMENT SCHEDULE; DEVELOPMENT OBLIGATIONS GENERALLY

    3.1  During the  period commencing  on ______________, 20_____, and expiring
on _______________, 20____, Developer shall develop and open for business in the
Territory,  in accordance with the parameters  established under Subsection 3.2,
that number of  additional  Restaurants  as is required to achieve at the end of
such  period,  a total  number  of  Restaurants  open for  business  within  the
Territory  which,  after including the Restaurants  developed during the Initial
Development  Periods,  will  equal  the  Minimum  Development  Potential  of the
Territory (as defined herein below).

    3.2  (a)  Each  consecutive  two (2) year period, commencing with the period
beginning on _______________,  20____, is hereafter referred to as a "Subsequent
Development Period."

         (b)  On or  before  the commencement  of  each  Subsequent  Development
    Period,  Franchisor  shall  provide to  Developer  in writing  the number of
    Restaurants to be developed by Developer during such Subsequent  Development
    Period ("Subsequent Development Schedule"), together with a detailed summary
    of the Minimum  Development  Potential  calculations  used to determine  the
    Subsequent Development Schedule. The minimum development potential ("Minimum
    Development Potential") shall be determined as follows:

              (i)   Each Area of Dominant Influence ("A.D.I."), as determined by
         the 1988 Arbitron Ratings, comprising all or a portion of the Territory
         shall  be  placed   into  one  of  four  market   categories   ("Market
         Categories"),  identified as either a "Small Market",  defined as those
         A.D.I.'s  containing  less  than  135,000  households  in  metropolitan
         counties  within  the  Territory  with  incomes  greater  than  $25,000
         ("Income  Qualified Metro  Household");  a "Medium Market",  defined as
         those A.D.I.'s  containing  135,000 to 399,999 Income  Qualified  Metro
         Households;  a "Large  Market",  defined as those  A.D.I.'s  containing
         400,000 to 1,399,999  Income  Qualified  Metro  Households;  or a "Mega
         Market",  defined as those A.D.I.'s containing 1,400,000 or more Income
         Qualified Metro Households (Small Market,  Medium Market,  Large Market
         or Mega  Market  may also be  referred  to  herein  individually  as an
         "A.D.I.  Market" or collectively as "A.D.I.  Markets". The income level
         set forth above may,  but need not,  be adjusted  upward or downward by
         Franchisor  once every  five (5) years in order to  reflect  changes in
         household income, such adjustments to be determined by reference to the
         United States Census Bureau's Median  Household Income Index or if such
         index no  longer  exists  at the time it is to be used,  then the index
         employed shall be such other generally known index used by NPD Crest or
         other such similar company then used by Franchisor.

              (ii)  Each county within an A.D.I. Market shall be classified as a
         "Metropolitan  County",  those counties with a total population greater
         than  50,000;  a  "Small  Town  County",  those  counties  with a total
         population of 20,000 to 50,000;  or an "Other  County",  those counties
         with a total population less than 20,000  (Metropolitan  County,  Small
         Town  County and Other  County  may be for  description  purposes  also
         referred to herein as a "County Type").

                                      E-6
<PAGE>

              (iii) Each A.D.I. Market  shall at that time be assigned to one of
         four   development   groups  according  to  the  level  of  development
         penetration  which  Developer  has  achieved  in the  A.D.I.  Market as
         compared  to the  level  of  development  penetration  achieved  by all
         domestic development in the System. The four development groups will be
         determined  by ranking  each  A.D.I.  in the System  within each of the
         Market Categories from most developed to least developed.  The A.D.I.'s
         in ranking order from most developed to least  developed  shall then be
         divided   into   four   substantially    equal   development    groups:
         "Opportunistic  Group",  "Second Group", "Third Group" and "Lower Limit
         Group".  The average number of Restaurants  per Income  Qualified Metro
         Household  developed by the top three  territories in the System of the
         Second Group in each A.D.I.  Market  category shall be the  development
         target for each such A.D.I. Market category ("Penetration Target").

              (iv)  The total number of Restaurants to be developed by Developer
         in each Metropolitan  County of an A.D.I.  Market shall be equal to the
         number of Income  Qualified  Metro  Households  in such  A.D.I.  Market
         divided   by  the   Penetration   Target   ("Metropolitan   Development
         Potential"). The Metropolitan Development Potential minus the number of
         Restaurants in each Metropolitan County then open and operating in said
         A.D.I.  Market shall be the number of Restaurants in each  Metropolitan
         County  then   available   for   development   in  the  A.D.I.   Market
         ("Metropolitan Development Balance").

              (v)   The  Minimum  Development  Potential  shall  be  the maximum
         number  of  Restaurants  Franchisor  may   include  on  the  Subsequent
         Development  Schedule  and  thus require  Developer  to develop in  the
         A.D.I.  Market during the  next Subsequent Development Period; subject,
         however, to  the minimum and  maximum development  criteria outlined in
         paragraph (c) and (d) of this Subsection 3.2. In the event,  however, a
         particular A.D.I. Market is in the Opportunistic  Group,  Developer and
         Franchisor   shall  negotiate  in   good  faith  a  mutually  agreeable
         Subsequent  Development Schedule;  provided,  however,  said Subsequent
         Development Schedule  shall not reflect a  number of  Restaurants  less
         than the remaining undeveloped portion of the Metropolitan  Development
         Potential, nor shall the Developer be required (without its consent) to
         develop more than the remaining undeveloped portion of the Metropolitan
         Development Potential.

         (c)  During each Subsequent  Development Period that Developer has less
    than ten (10)  Restaurants  open and operating in the  Territory,  Developer
    shall be required to develop no more than one (1)  Restaurant  each calendar
    year that the number of Restaurants  in Developer's  Territory does not meet
    or exceed the Minimum  Development  Potential of the Territory.  During each
    Subsequent   Development   Period  that  Developer  has  ten  (10)  or  more
    Restaurants in the Territory, Developer shall be required to develop no more
    than two (2)  Restaurants  each calendar year that the number of Restaurants
    in the Territory does not meet or exceed the Minimum  Development  Potential
    for the Territory.

         (d)  Notwithstanding  the  Minimum  Development   Potential  for  which
    Developer  might  otherwise be obligated in order to satisfy the Penetration
    Target for the  Territory,  Developer  shall not be required to develop more
    than ten (10) Restaurants in any one calendar year in the Territory.  In the
    event  Developer holds other  development  agreements with the System or the
    Principal Shareholders of Developer are the identical Principal Shareholders
    of other entities who hold other development  agreement(s) within the System
    (such other entities being defined  hereunder as  "Affiliates"),  Developer,
    together with such Affiliates,  may limit its combined development under all
    such  development  agreements  to no more than ten (10)  Restaurants  in the
    aggregate in any calendar year. Provided,  however,  Developer and Principal
    Shareholder(s)  hereby  acknowledge  that if Developer  exercises its option
    under this provision to limit its combined  development  with its Affiliates
    and  after  so  limited  its  development,   Developer  (together  with  its
    Affiliate) does not achieve such aggregate  development,  Developer shall be
    in  default  under  that  development  agreement  (or all  such  development
    agreements as the case may be) but only such development  agreement(s) which
    did not meet the individual  Subsequent  Development Schedule calculated and
    agreed to for that individual development agreement.

                                      E-7
<PAGE>


         (e)  If the Developer has timely developed and opened for operation the
    Restaurant  called for by the Initial  Development  Schedule and  thereafter
    during a Subsequent  Development  Period  objects to the  development of the
    last Restaurant  required during that  Subsequent  Development  Period under
    Article 3 hereof,  then Franchisor hereby grants Developer the right to make
    a written  demand  for a study as to  whether  said last  Restaurant  may be
    located  in the  Territory  or  whether  said  Restaurant  will at that time
    cannibalize  the sales  and  traffic  with  respect  to its  other  existing
    Restaurants  in the  Territory.  In the event a written  request  for such a
    study  is  received  by  Franchisor  prior  to the  end  of  the  Subsequent
    Development   Period  in  question  and  prior  to  any  default  under  the
    Development Agreement, then in such an event, Franchisor and Developer shall
    in good faith  attempt  to  resolve  the issue  regarding  whether  the last
    Restaurant  should or should not be  developed  and opened.  If an agreement
    cannot be reached  (which  process may include the  Franchisor and Developer
    ordering a PIN study at Developer's  cost),  Franchisor and Developer  shall
    submit the disagreement to the National Franchise  Mediation Board ("NFMB"),
    as herein defined  below,  for handling and  disposition.  The submission of
    said disagreement will be in accordance with subsection 3.2 (f)(i) hereof.

         (f)  The following shall  apply to the  submission to the NFMB pursuant
    to the preceding paragraph:

              (i)   The disagreement shall be submitted  by the Developer by way
         of a written demand for mediation tendered to Franchisor  within thirty
         (30) days after Franchisor has indicated to Developer than an agreement
         cannot be reached.  Developer will deposit  $35,000 with  Franchisor at
         the time of the  filing of its  written  demand for  mediation.  If the
         demand or the deposit or either or both of them are not so timely made,
         then in such an event, the Developer shall be deemed to have waived its
         right to request mediation and further, shall be deemed to have elected
         to accept the full number of Restaurants  Franchisor had determined for
         the  Subsequent  Development  Period  then in  question.  The NFMB will
         determine  in its  sole  discretion  the  procedure,  time  limits  and
         additional filing and responses required with respect to the mediation.
         However,  it is understood and agreed by all parties that the mediation
         is  intended  to provide a more  expeditious  resolution  of the matter
         submitted  to the NFMB.  The  mediation  decision to be rendered by the
         NFMB will be binding upon all parties to the  mediation.  The party for
         whom a  favorable  decision is rendered  shall  receive  from the other
         party reimbursement for all out-of-pocket costs and expenses, including
         attorneys'  fees incurred and any PIN study  conducted  with respect to
         the mediation, which are determined to be reasonable by the NFMB.

                                      E-8
<PAGE>


              (ii)  At the conclusion of the mediation, the NFMB shall issue its
         decision  either  supporting  Developer  and  indicating  that the last
         Restaurant   need  not  be  developed  as  a  part  of  the  Subsequent
         Development Period in question,  or conversely,  supporting  Franchisor
         and  indicating  that  the  last  Restaurant  should  be a part  of the
         development for that Subsequent  Development Period. If the decision of
         the NFMB supports the Developer,  then in such an event,  the Developer
         shall  maintain  its  exclusive  rights  to the  Territory,  and  shall
         continue  to  maintain  its right to  develop  therein  in the  future.
         Provided,  however,  Franchisor may request further  development during
         future Subsequent  Development  Periods. In addition,  Franchisor shall
         reimburse   Developer   the  $35,000   previously   deposited   at  the
         commencement of the mediation process.

              (iii) If the decision of the NFMB supports the Franchisor, then in
         such an event,  the  Developer  shall be required to construct and open
         the last Restaurant,  pursuant to the development  schedule  originally
         listed as a part of the Subsequent  Development  Period so in question.
         In  addition,   the  funds  previously   deposited  by  Developer  with
         Franchisor  shall  be  applied  to  the  Franchise  Fee  due  for  such
         Restaurant.  However,  in the  event  Developer  fails to  develop  the
         Restaurant,  the  $35,000  shall be  forfeited  and  shall  become  the
         exclusive property of Franchisor and further, the exclusive development
         rights granted by the  Development  Agreement shall terminate and be of
         no further force and effect.

              (iv)  If,  after  a  new developer  has been appointed to open the
         last Restaurant,  and  said  Restaurant  has  opened for operation, and
         within  the  first twelve (12) months  of operation of said Restaurant,
         Developer  believes  that  said new  developer's  Restaurant  has had a
         significant  cannibalization  effect  upon one  or more of  Developer's
         Restaurants, then in such an  event,  the Developer may avail itself of
         the following post impact  process  ("Post Impact  Process").  The Post
         Impact Process will consist of the submission of the positions  of  the
         Developer,  new  developer  and Franchisor  to the  NFMB  for study and
         mediation.  The Post Impact Process  is and shall be from  time to time
         more fully outlined in the  Manuals. The NFMB shall  have the  right to
         issue a non-binding determination as to whether or not the  Developer's
         Restaurant  or  Restaurants  (as  the  case  may  be)  were,  in  fact,
         significantly  cannibalized  as   contended  by  Developer  and  if  so
         determined,  a recommendation  on whether any  and what type of royalty
         relief or other relief, if any, shall be granted Developer. The parties
         agree to exhaust the foregoing remedies and seek the mediation provided
         by the NFMB prior to submitting the matter to any judicial tribunal.

    3.3  Strict  compliance  with  the  development   schedule   established  in
accordance with  Subsection 3.2 hereof is of the essence of this  Agreement.  If
Developer  shall fail to  fulfill  its  specified  development  obligation  with
respect to any Subsequent Development Period, this Agreement shall automatically
terminate sixty (60) days after the end of the Subsequent  Development Period in
question,  unless  by the  end of such  sixty  (60)  day  period  Developer  has
fulfilled the development  obligation  relating to such  Subsequent  Development
Period.

                                      E-9
<PAGE>


    3.4  If, during  the term of this  Agreement,  (a)  Developer  transfers  or
disposes of any Restaurant developed hereunder in accordance with the provisions
hereof,  or for any other  reason  ceases to operate  any  Restaurant  developed
hereunder,  and (b) after such  transfer or other  cessation  of  operation  the
premises no longer are utilized for the operation of a  Restaurant,  Developer's
development  obligation in the Initial or Subsequent Development Period in which
such transfer or other cessation of operations occurred shall increase,  subject
to the general limitations on Developer's  development  obligations set forth in
Section  2 and  Section  3, by the  number of  Restaurants  which  Developer  so
transferred, disposed of or which otherwise ceased to operate.

    3.5  Franchisor  represents  that it is the sole owner of the  service  mark
Applebee's  Neighborhood  Grill & Bar.  If  Franchisor  determines  that a third
person  has rights  under the law of any state  with  respect to such mark which
precludes  Developer from fulfilling any portion of its development  obligations
pursuant to this  Agreement,  Franchisor and Developer  shall  negotiate in good
faith for a revision of those  development  obligations,  a redefinition  of the
Territory, or such other modifications of this Agreement as may be reasonable in
the circumstances.

    3.6  Notwithstanding  the foregoing  Subsection 3.2 and in addition thereto,
Franchisor shall further divide those counties identified as Small Town Counties
and Other Counties ("STC") and provide for the development of such counties.

         (a)  Franchisor  shall request  Developer to commit to develop and open
    for operation pursuant to a pre-determined  development  schedule the number
    of  Restaurants   utilizing  a  Small  Town   Restaurant   prototype   ("STC
    Restaurant") and in the specified  counties set forth on the written request
    tendered to  Developer  by  Franchisor  (the "STC  Notice").  The STC Notice
    provided  Developer will further reflect the proposed  development  schedule
    for all such STC Restaurants.  Within 30 days of Developer's receipt of such
    STC  Notice,  Developer  shall  indicate  in  writing  whether it desires to
    develop  an STC  Restaurant  in all or a  portion  of the  counties  listed.
    Thereafter,  the  development  schedule  suggested in the STC Notice will be
    adjusted by the Franchisor,  using the same pace of development as set forth
    in Subsection  3.2(c) and Subsection  3.2(d).  With respect to this process,
    the Franchisor and Developer will review the development feasibility of each
    county listed in the STC Notice,  giving  appropriate  consideration to such
    factors as liquor license  availability,  proximity to existing Restaurants,
    the  presence or absence of  competitive  concepts and other such matters as
    Franchisor deems  appropriate.  Any counties removed from the purview of the
    STC  Notice  by such  negotiations  will be  returned  to the pool of unused
    counties for possible future development. At or before the conclusion of the
    30-day notice period, unless otherwise extended in writing, Developer shall:

              (i)   Signify its agreement to develop in accordance  with the STC
         Notice  in all of the  listed  counties  and  in  accordance  with  the
         proposed  development schedule included with the revised STC Notice and
         as a result,  Developer's exclusive right to develop Restaurants in the
         Territory as previously granted remains unaffected;

                                      E-10
<PAGE>


              (ii)  Signify  its  agreement  to develop an STC  Restaurant  in a
         portion  of the STC  Notice  listed  counties,  and in  such an  event,
         Developer   shall  no  longer  have  the  exclusive  right  to  develop
         Restaurants  in the  counties  in which it chose not to develop the STC
         Restaurant  and will be subject to the terms set forth in  subparagraph
         (c) below; or

              (iii) Reject the  development  of an STC  Restaurant in all of the
         STC Notice listed  counties,  and in such an event,  Developer shall no
         longer have the exclusive right to develop  Restaurants in the counties
         listed in the  final STC  Notice  and will be  subject  to the terms of
         subparagraph (c) below; or

              (iv)  Seek  mediation  of the  inclusion  of one  or  more  of the
         counties in the STC Notice with the National Franchise  Mediation Board
         in accordance with Subsection 3.6(b); or

              (v)   Fail to respond in writing to the STC Notice, in which event
         the  Developer  will no  longer  have the  exclusive  right to  develop
         Restaurants  in the  counties  set forth in the STC  Notice and will be
         subject to the terms of subparagraph (c) below.

         (b)  In the event the Developer  contests the STC  Notice as referenced
    in subsection  3.6(a)(iv) above, such  disagreement  shall be  submitted for
    mediation  to  the  National  Franchise  Mediation  Board,  which  shall  be
    comprised  of  two  (2)  individuals   appointed  by  Franchisor,   two  (2)
    individuals  appointed  by  the  Franchise  Business  Council  and  one  (1)
    individual chosen by the foregoing four (4) individuals,  in accordance with
    the following:

              (i)   Developer will  deposit with  Franchisor  at the time of the
         filing of its written  demand for  mediation an amount equal to $35,000
         times the  number of  counties  about  which  Developer  is  contesting
         development. Notwithstanding the foregoing, in no event shall less than
         $35,000 be so deposited.  If the deposit is not so timely made, then in
         such an event,  the Developer  shall be deemed to have waived its right
         to request  mediation and further,  deemed to have elected  alternative
         (v) as set forth in subparagraph 3.6(a).

              (ii) The NFMB will determine in its sole discretion the procedure,
         time limits and additional  filing and responses  required with respect
         to the mediation.  However,  it is understood and agreed by all parties
         that the mediation is intended to provide a more expeditious resolution
         of the matter submitted to the NFMB.

              (iii) The  mediation  decision  to be rendered by the NFMB will be
         binding upon all parties to the mediation.

              (iv)  The party for whom a favorable decision  is  rendered  shall
         receive from the other party  reimbursement for all out-of-pocket costs
         and expenses,  including  attorneys' fees, incurred with respect to the
         mediation which are determined to be reasonable by the NFMB.

                                      E-11
<PAGE>


              (v)   At the conclusion of the mediation, the NFMB shall issue its
         decision   either   supporting   Developer  and  indicating   that  the
         county(ies)  to which the Developer  objected shall be removed from the
         STC  Notice  and  returned  to  the  pool  of  unused  county(ies),  or
         conversely,  supporting  Franchisor and indicating that the county(ies)
         about which an  objection  was raised  should be so included in the STC
         Notice and therefore an STC Restaurant should be developed therein.

              (vi)  If the decision of the NFMB supports the  Developer, then in
         such an event,  the Developer shall maintain its exclusive right to the
         county(ies)  in question,  and shall  continue to maintain its right to
         develop  therein in the future.  In addition,  the amount  deposited by
         Developer shall be refunded to Developer.

              (vii) If the decision of the NFMB supports the Franchisor, then in
         such an event,  the  Developer  shall be required to construct  the STC
         Restaurant in the county(ies) in question,  pursuant to the development
         schedule  originally  listed in the STC  Notice.  The funds  previously
         deposited  by  Developer  with  Franchisor  shall  be  applied  to  the
         Franchise  Fee due for each of said  units at the rate of  $35,000  per
         each unit. In the event  Developer  fails to develop some or all of the
         STC Restaurants in the county(ies) here in question, any unused deposit
         shall be forfeited and further, the Developer's exclusive rights to the
         county(ies)  in which no  development  occurred shall be terminated and
         not  subject  to any first  right of  refusal  rights,  notwithstanding
         anything herein to the contrary.

         (c)  Except as otherwise provided in subparagraph 3.6(b) hereof, in the
    event that the Developer,  after receiving its STC Notice,  falls within the
    purview of subsections  3.6(a)(ii),  (iii),  or (v) above,  the counties for
    which  the  Developer  rejected  the  right to  develop  an STC  Restaurant,
    Franchisor  may in its  discretion  seek another  franchisee  to develop the
    rejected  counties or develop STC  Restaurants in those counties on its own.
    Upon the  identification  of a bona fide  prospective  franchisee  for those
    counties or upon the  determination by Franchisor that it will develop those
    counties,  Franchisor shall provide  Developer with a written first right of
    refusal  notice  ("FROR  Notice"),  which  FROR  Notice  will set  forth the
    counties in question and the schedule of  development.  Developer shall have
    30 days  within  which to  respond  to such  FROR  Notice in  writing.  Such
    response  shall be solely to accept or reject in whole its right of refusal.
    No partial  acceptances will be honored by the Franchisor.  In the event the
    Developer  fails to  respond or  responds  and  indicates  its desire not to
    develop the counties  listed,  then  Developer's  exclusive right to develop
    such counties  shall no longer be valid and  exclusivity  rights  previously
    granted in the  Development  Agreement as to those  counties  shall be of no
    further effect,  and in such an event the Franchisor may grant a third party
    prospective  franchisee  the  right  to  develop  STC  Restaurants  in those
    counties or develop STC Restaurants itself, without regard to the Developer.
    Conversely,  if the  Developer  responds  to the FROR  Notice in writing and
    indicates its desire to build the STC Restaurants  listed in compliance with
    the  schedule  set  forth,  and at the same time  tenders  a  non-refundable
    deposit in the amount of $35,000 for each of the Restaurants to be developed
    in the counties  listed in the FROR  Notice,  the  Developer  shall have the
    right to develop said STC Restaurants and shall further retain the exclusive
    right to develop Restaurants in the counties so listed.

                                      E-12
<PAGE>

         (d)  As to the other counties  unallocated under the foregoing  process
    set forth in  subsection  (c) above,  Franchisor  may issue  future  notices
    regarding  development of the same STC Restaurants for use in some or all of
    the counties. Further, Franchisor may create other new small town prototypes
    using the System developed for the Restaurants,  which extend the brand name
    but which would more likely be adaptable to the demographics  shown for some
    or all of the other counties which have not been  identified for development
    under the preceding  sentence or under  subparagraph (b) above. As each such
    release  (which  may be in one  or  more  increments)  is  developed  by the
    Franchisor, the same procedures set forth in subparagraphs (a) and (b) above
    shall apply.

         (e)  The  development  and opening of  an  STC  Restaurant in  a listed
    county will not apply to or  substitute for the  development  required under
    Section 2.1 hereof.  However, in the  event Developer  fails to  develop and
    open the Restaurants  called for under Section 3.6(a) hereof pursuant to the
    schedule established by  Franchisor, such  default in development shall only
    affect the Developer's right to open and operate in the counties so  listed.
    If Developer fails to open one or more of the STC Restaurants  in the  total
    aggregate  time  period  set forth in the  schedule,  then in such an event,
    Developer  shall  lose its  rights to  develop  any STC  Restaurants  in the
    counties  listed in the STC  Notice or the FROR  Notice (as the case may be)
    wherein no Restaurant is in operation and further,  the exclusivity provided
    by this  Development  Agreement  shall be of no further force or effect with
    respect  to  those  counties  listed  in said  Notice  (but  only as to said
    affected  counties) and Franchisor may grant  development  rights to a third
    party or develop said  counties  itself.  It is  understood  that the 60-day
    period provided for in Section 2.3 of the Development  Agreement shall apply
    to all of the Restaurants to be developed under this paragraph.

4.  FRANCHISE FEE AND ROYALTY RATE

    4.1  Developer shall pay Franchisor a franchise fee of  $_____________  with
respect to each Restaurant which is developed  pursuant to this Agreement during
the Initial Development  Periods.  Thereafter,  Developer shall pay Franchisor a
franchise  fee in an amount  which is equal to the amount of the  franchise  fee
then in effect at the time of the issuance of the  franchise  agreement for each
additional restaurant to be opened during any Subsequent Development Period. The
amount  of the  franchise  fee  shall  be set  forth in the  franchise  offering
circular  received by the Developer from  Franchisor  immediately  preceding the
issuance of such franchise agreement.  Simultaneously with the execution of this
Agreement,  Developer shall pay to Franchisor, by certified check, the amount of
$__________ ("Franchise Fee Deposit"). Said Franchise Fee Deposit shall be equal
to the  greater  of (a)  the  franchise  fee for  one of the  Restaurants  to be
developed during the Initial  Development  Periods,  or (b) ten percent (10%) of

                                      E-13
<PAGE>


the entire  franchise  fees  covering  the  _________  (___)  Restaurants  to be
developed  during the first three1 (3) Initial  Development  Periods pursuant to
this  Agreement  (as reduced by a credit of $6,000  based on  Developer's  prior
payment, if so paid, of a non-refundable  $6,000 application fee). The remaining
balance of the franchise fees for each of the Restaurants to be developed during
the three (3) Initial  Development  Periods shall be paid by certified  check as
follows:  one-half  (1/2) of the balance  shall be paid upon signing a franchise
agreement for that  Restaurant and the remaining  balance shall be paid fourteen
(14) days prior to the scheduled  opening of the  Restaurant.  The Franchise Fee
Deposit shall be proportionately allocated to the franchise fee due with respect
to each  Restaurant to which it applies.  The franchise fee with respect to each
Restaurant  to be  developed  during a  Subsequent  Development  Period  or with
respect to any additional  Restaurants  developed during the Initial Development
Periods shall be paid by certified check in the same manner.

    4.2  Except as provided in this Subsection 4.2 and in Subsection 19.1 of the
form of franchise  agreement  which is attached  hereto as Appendix B, Developer
shall have no right to recover from Franchisor,  directly or indirectly,  any of
the  franchise  fees which are prepaid  pursuant to  Subsection  4.1 hereof.  If
Developer's  failure to develop the total  number of  Restaurants  specified  in
Subsection  2.1 of this  Agreement is the result of the assertion of rights by a
third party as described in Subsection 3.5 hereof,  those prepaid franchise fees
which relate to the  Restaurants  which cannot be so developed shall be refunded
to Developer in cash.

    4.3  As partial consideration for the  rights granted  to Developer pursuant
to the franchise  agreements covering the Restaurants which  Developer  develops
hereunder,  Developer (as franchisee under each such franchise  agreement) shall
pay Franchisor a monthly royalty fee as determined by Franchisor.  Until January
1, 2020,  the monthly  royalty fee shall not exceed  four  percent  (4%) of each
calendar  month's  gross sales (as that term is defined in the form of franchise
agreement  which is attached  hereto as  Appendix  B).  Thereafter,  the monthly
royalty fee shall be as determined by Franchisor.

    4.4  Pursuant  to  its  obligations   hereunder  and  under  the  applicable
franchise  agreements, Franchisor will make various  expenditures  in connection
with the development of  prospective  Restaurant sites  by Developer,  including
expenditures  for   travel,  lodging,   meals, obtaining  of  information  about
prospective sites, demographic information, traffic counts, and  inquiries  into
local  laws and  ordinances. Developer  shall promptly  notify  Franchisor  of a
decision  to cease development of  a prospective  Restaurant site. In  the event
that  Developer  fails to  open a  restaurant at  any such site, in  lieu of the
payment of the franchise fee  therefor, Franchisor  in its sole  discretion  may
require  Developer  to reimburse  Franchisor for Franchisor's  expenditures with
respect to that site. In such  event,  Franchisor shall  provide Developer  with
an  itemized list of Franchisor's  expenditures with respect to that site within
thirty (30) business days after Franchisor receives  notice  that  Developer  no
longer  intends to  develop a  Restaurant at  that  site,  and  Developer  shall
reimburse Franchisor for such costs within thirty (30) days after receiving such
list.


1 In the  event  there  are more or less  than  three  (3)  Initial  Development
Periods,  these fees are payable for each of the Restaurants provided for in the
applicable total number of Initial Development Periods.

                                      E-14
<PAGE>


5.  SITE APPROVALS: PLANS AND SPECIFICATIONS

    5.1  Developer assumes all cost, liability,  expense and  responsibility for
locating,  obtaining,  financing and developing sites for  Restaurants,  and for
constructing and equipping Restaurants at such sites. To assist Developer in the
site  selection   process,   Franchisor  will  provide  Developer  with  certain
demographic  information  regarding the site, will conduct an on-site inspection
and will  review any lease or contract  under  negotiation  for the  prospective
site,  such  services to be provided to Developer  at no  additional  cost.  The
development  of a  Restaurant  at any site must be  approved  by  Franchisor  in
accordance with its then-existing site approval procedure.  In connection with a
request  for  approval  of a proposed  site for a  Restaurant,  Developer  shall
provide a related contract of sale or lease agreement and such other information
and material as the Franchisor may reasonably require.  Franchisor's approval of
a prospective  Restaurant  site shall not be unreasonably  withheld.  Franchisor
shall  notify  Developer  whether it  approves a proposed  site and the  related
contract  of sale  or  lease  agreement  within  thirty  (30)  business  days of
receiving  Developer's request for approval.  Failure of Franchisor to so notify
Developer  within such thirty (30)  business day period shall be deemed to be an
approval  of such  site and the  related  contract  of sale or lease  agreement.
Developer  acknowledges that  Franchisor's  approval of a prospective site for a
Restaurant  does not  constitute  a  representation,  promise  or  guarantee  by
Franchisor  that a  Restaurant  operated  at that  site  will be  profitable  or
otherwise  successful.  Developer  shall not make any  binding  commitment  to a
prospective  vendor  or  lessor  of real  estate  with  respect  to a site for a
Restaurant   unless  Franchisor  has  approved  that  site  in  accordance  with
Franchisor's   then-existing  site  approval  procedure.  After  Franchisor  has
approved a site for a Restaurant, Developer shall provide Franchisor with a copy
of the executed  contract of sale or lease, as applicable,  relating to the site
within a reasonable period of time.

    5.2  For   each  Restaurant   which  Developer  develops  pursuant  to  this
Agreement,   Franchisor   will  make   available   to   Developer   Franchisor's
specifications for a typical Restaurant. Developer will obtain architectural and
engineering services independently and at its own expense. Franchisor shall have
the right to  review all  such  architectural  and/or  engineering  plans  which
Developer  obtains  and to  prohibit the  implementation of  any  plan, or  part
thereof, which Franchisor, in its sole and absolute discretion, believes  is not
consistent  with the best  interests of the System. In the event that Franchisor
desires  to prohibit  the implementation  of any  such  plan,  or part  thereof,
Franchisor  shall  so notify  Developer   within  thirty (30)  business  days of
receiving such architectural and/or engineering plans  for  review.  Failure  of
Franchisor to  so notify Developer  within such thirty (30)  business day period
shall be deemed to be an approval of such plans.  In the event  Franchisor  does
object to  any such plan, Franchisor  shall provide  Developer with a reasonable
detailed list of changes necessary to  make such plans acceptable to Franchisor.
Franchisor  shall,  upon  resubmission  of  such  plans, with  such  changes  as
Developer has  prepared, notify Developer  within fifteen (15)  business days of
receiving such plans whether they are acceptable. Failure to so notify Developer
within such fifteen (15) business  day period shall be  deemed to be an approval
of such amended plans.

    5.3  If Developer  acquires a leasehold interest in a site,  that  leasehold
interest  shall be for a term  which is at least as long as the term of the form
of  franchise  agreement  which is attached  hereto as Appendix B, and the lease
shall provide that if the applicable  franchise agreement is terminated prior to
the expiration of that term for whatever reason,  Developer may assign the lease
to Franchisor  without the lessor having any right to impose  conditions on such
assignment or to obtain any payment in connection therewith.

                                      E-15
<PAGE>


6.  FEES AND FRANCHISE AGREEMENTS

    Not later  than  ninety  (90) days  prior to the  scheduled  opening  of any
Restaurant which has been developed pursuant to this Agreement,  Developer shall
deliver to Franchisor an executed franchise agreement  substantially in the form
which is attached  hereto as Appendix B, provided,  however,  that the franchise
agreement which Developer  executes shall require the payment of a franchise fee
in the  amount  described  in  Subsection  4.1,  royalty  fees as  described  in
Subsection  4.3,  and  advertising  payments  at the rates then  established  by
Franchisor with respect to new  Restaurants,  except that in no event shall such
rates  exceed five  percent  (5%) of a  Restaurant's  gross sales (as defined in
Subsection 9.3 of the form of a franchise  agreement which is attached hereto as
Appendix B).

7.  DEVELOPER ORGANIZATION, AUTHORITY, FINANCIAL CONDITION AND SHAREHOLDERS

    7.1  Developer and each Principal Shareholder represent and warrant that:(a)
Developer  is a  corporation  duly  incorporated,  validly  existing and in good
standing under the laws of the state of its incorporation; (b) Developer is duly
qualified  and is authorized to do business and is in good standing as a foreign
corporation in each jurisdiction in which its business  activities or the nature
of the properties owned by it requires such qualification; (c) the execution and
delivery of this Agreement and the transactions  contemplated  hereby are within
Developer's  corporate  power;  (d) the execution and delivery of this Agreement
have been duly  authorized by the Developer;  (e) the articles of  incorporation
and by-laws of Developer delivered to Franchisor are true, complete and correct,
and there have been no changes therein since the date thereof; (f) the certified
copies of the minutes  electing the officers of Developer  and  authorizing  the
execution  and delivery of this  Agreement are true,  correct and complete,  and
there have been no changes therein since the date(s)  thereof;  (g) the specimen
stock  certificate  delivered to Franchisor  is a true  specimen of  Developer's
stock  certificate;  (h) the  financial  statement  of Developer  and  financial
statements of its Principal  Shareholders,  heretofore  delivered to Franchisor,
are true,  complete and correct,  and fairly present the financial  positions of
Developer and each Principal Shareholder,  respectively, as of the date thereof;
(i) such financial  statements  have been prepared in accordance  with generally
accepted  accounting  principles;  and (j) there have been no materially adverse
changes in the  condition,  assets or  liabilities  of  Developer  or  Principal
Shareholders since the date or dates thereof.

    7.2  Developer and each Principal  Shareholder covenant that during the term
of this  Agreement:  (a)  Developer  shall do or  cause  to be done  all  things
necessary to preserve and keep in full force its  corporate  existence and shall
be in good standing as a foreign  corporation in each  jurisdiction in which its
business  activities or the nature of the  properties  owned by it requires such
qualification; (b) Developer shall have the corporate authority to carry out the
terms of this Agreement; and (c) Developer shall print, in a conspicuous fashion
on all  certificates  representing  shares of its stock  when  issued,  a legend
referring to this Agreement and the restrictions on and obligations of Developer
and Principal Shareholders hereunder,  including the restrictions on transfer of
Developer's shares.

                                      E-16
<PAGE>


    7.3  Prior  to  development  of  the  first   Restaurant  pursuant  to  this
Agreement, Developer shall maintain an average  monthly  balance of five hundred
thousand dollars ($500,000) in liquid  assets. For  purposes of this  Agreement,
"liquid assets" shall consist of cash, cash available to  Developer  pursuant to
an irrevocable line of credit issued by a commercial bank in favor of Developer,
marketable  securities,  or any other  similar  asset which  Franchisor's  Chief
Financial Officer  designates in writing as a liquid asset. After development of
the first Restaurant  pursuant to this Agreement,  and at any time thereafter in
which  Developer is operating  one (1)  Restaurant in the  Territory,  Developer
shall maintain an average monthly balance of three hundred twenty-five  thousand
dollars ($325,000) in liquid assets.  After development of the second Restaurant
pursuant to this Agreement, and thereafter, so long as Developer is operating at
least two (2) Restaurants in the Territory,  Developer shall maintain an average
monthly  balance of one hundred  fifty  thousand  dollars  ($150,000)  in liquid
assets. At all times Developer shall maintain the necessary  financial resources
to satisfy its development obligations hereunder.

    7.4  In addition to its  obligations  pursuant  to  Subsections  7.1 and 7.3
hereof,  Developer and Principal Shareholders shall provide Franchisor with such
financial  information as Franchisor  may reasonably  request from time to time,
including,  on an  annual  basis,  copies  of the  then-most  current  financial
statements of Developer and each Principal  Shareholder,  dated as of the end of
the last preceding fiscal year of the Developer or Principal  Shareholder,  said
statements  to be delivered to  Franchisor  no later than April 15 of each year,
which  financial  statements  shall  conform  to  the  standards  set  forth  in
Subsection 7.1 hereof.

    7.5  Developer  and   each  Principal  Shareholder  represent,  warrant  and
covenant that  all Interests (as defined in Subsection  8.4 hereto) in Developer
are owned as set forth on Appendix C hereto, that no Interest  has been  pledged
or  hypothecated (except  in accordance with  Section 8 of this  Agreement), and
that no change will be made in the ownership of any such Interest other  than as
permitted by this Agreement, or otherwise consented to in writing by Franchisor.
Developer  and  Principal  Shareholders  agree to furnish  Franchisor  with such
evidence  as  Franchisor  may  request,  from time to time,  for the  purpose of
assuring  Franchisor that the Interests of Developer and Principal  Shareholders
remain as represented herein.

    7.6  Each Principal  Shareholder, jointly  and severally,  hereby personally
and unconditionally guarantees each of  Developer's   financial  obligations  to
Franchisor  (including,  but not  limited  to, all  obligations  relating to the
payment of fees by Developer to Franchisor).  Each Principal  Shareholder agrees
that  Franchisor may resort to such Principal  Shareholder  (or any of them) for
payment of any such financial  obligation,  whether or not Franchisor shall have
proceeded  against  Developer,  any  other  Principal  Shareholder  or any other
obligor  primarily or secondarily  obligated to Franchisor  with respect to such
financial  obligation.   Each  Principal  Shareholder  hereby  expressly  waives
presentment,  demand,  notice  of  dishonor,  protest,  and  all  other  notices
whatsoever  with  respect  to  Franchisor's  enforcement  of this  guaranty.  In
addition,   each  Principal  Shareholder  agrees  that  if  the  performance  or
observance by Developer of any term or provision hereof is waived or the time of
performance  thereof  extended by  Franchisor,  or payment of any such financial
obligation is accelerated in accordance  with any agreement  between  Franchisor
and any party liable in respect  thereto or extended or renewed,  in whole or in
part, all as Franchisor  may  determine,  whether or not notice to or consent by
any Principal Shareholder or any other party liable in respect to such financial
obligations  is given or obtained,  such  actions  shall not affect or alter the
guaranty of each Principal Shareholder described in this Subsection.

                                      E-17
<PAGE>


    7.7  Developer  and each  Principal  Shareholder  represent  and  warrant to
Franchisor that:

         (a)  Neither  Developer  nor  any  Principal  Shareholder  or any other
    person  with  a direct  or  indirect  ownership  interest  in  Developer  is
    identified,  either by  name or an alias, pseudonym or nickname, on the list
    of "Specially  Designated Nationals and  Blocked Persons"  maintained by the
    U.S. Treasury Department's Office of Foreign Assets Control (texts available
    at www.treas.gov/offices/enforcement/ofac/). Further,  Developer   and   its
    Principal  Shareholders  represent and warrant that neither has violated and
    agree that  neither  will violate any law (in effect now or which may become
    effective  in the future)  prohibiting  corrupt  business  practices,  money
    laundering  or the aid or support of persons or  entities  who  conspire  to
    commit  acts of terror  against  any person or  government,  including  acts
    prohibited    by   the    U.S.    Patriot    Act    (text    available    at
    http://www.epic.org/privacy/terrorism/hr3162.html),   U.S.  Executive  Order
    13244                  (text                   available                  at
    http://treas.gov/offices/enforcement/ofac/sanctions/terrorism.html),      or
    similar law;

         (b)  Developer  has not  made, nor  has any Principal Shareholder made,
    any expenditures  other than for lawful purposes or directly  or  indirectly
    offered, gave, promised to give or authorized the payment or the gift of any
    money,  or  anything  of value,  to any person or entity,  while  knowing or
    having  reason to know that all or a portion of such money or thing of value
    would  be given or  promised,  directly  or  indirectly,  to any  government
    official, official of an international organization,  officer or employee of
    a foreign  government or anyone acting in an official capacity for a foreign
    government,  for the  purpose of (1)  influencing  any  action,  inaction or
    decision  of such  official in a manner  contrary to his or her  position or
    creating an improper  advantage;  or (2) inducing such official to influence
    any government or instrumentality  thereof to effect or influence any act or
    decision of such government or instrumentality.

         (c)  Developer  nor any  Principal  Shareholder  or any other person or
    entity who has any direct or indirect  ownership  interest is or will become
    directly or indirectly  owned or controlled by  governmental  authorities of
    any  country  that is  subject to a United  States  embargo;  and

    Developer  understands  and its Principal  Shareholders  understand and have
been advised by legal counsel on the  requirements  of the United States Foreign
Corrupt         Practices        Act        (currently         located        at
www.usdoj.gov/criminal/fraud/fcpa.html, any local foreign corrupt practices laws
and       the        Patriot       Act        (currently        located       at
www.epic.org/privacy/terrorism/hr3162.html,   acknowledge   the   importance  to
Franchisor and the Restaurants and the parties' relationship of their respective
compliance  with  the  requirements  of these  laws,  including  any  applicable
auditing  requirements  and any  requirement  to  report  or  provide  access to
information to Franchisor or any government, that is made part of any applicable
law,  and agree to take all steps  required  by their  consultants,  agents  and
employees  to comply  with such laws prior to  engaging  or  employing  any such
individuals or entities.

                                      E-18
<PAGE>


8.  TRANSFER

    8.1  There  shall be no  Transfer  of any  Interest  of  Developer,  or of a
Principal Shareholder in Developer,  in whole or in part (whether voluntarily or
by operation of law), directly, indirectly or contingently, except in accordance
with the provisions of this Section 8.  "Transfer" and "Interest" are defined in
Subsections 8.2, 8.3 and 8.4.

    8.2  Except  as  provided  in  Subsection  8.3,  "Transfer"  shall  mean any
assignment,  sale,  pledge,  hypothecation,  gift or any other such event  which
would change ownership of or create a new Interest,  including,  but not limited
to:

         (a)  any change in the  ownership  of or rights in or to any  shares of
    stock or other equity  interest in Developer which would result from the act
    of any shareholder of Developer  ("Shareholder"),  such as a sale, exchange,
    pledge or  hypothecation  of shares,  or any interest in or rights to any of
    Developer's  profits,  revenues or assets,  or any such  change  which would
    result by operation of law; and

         (b)  any change in the percentage interest owned by any  Shareholder in
    the shares of stock of Developer,  or interests in its profits,  revenues or
    assets which would result from any act of Developer  such as a sale,  pledge
    or hypothecation of any Restaurant  assets (other than a pledge of assets to
    secure  bona  fide  loans  made  or  credit   extended  in  connection  with
    acquisition  of the assets  pledged,  provided that  immediately  before and
    after such  transaction  Developer  satisfies  the  applicable  liquid asset
    requirement  described in  Subsection  7.3 of this  Agreement);  any sale or
    issuance of any shares of Developer's stock; the retirement or redemption of
    any shares of Developer's  stock;  or any sale or grant to any person of any
    right to participate in or otherwise to share or become entitled to any part
    of Developer's profits, revenues, assets or equity.

    8.3  "Transfer" shall not include (a) a change in the ownership of or rights
to any  shares  or other  equity  interest  in  Developer  pursuant  to a public
offering of Developer's  securities registered under the Securities Act of 1933,
or (b) a change in the ownership of or rights to any  securities or other equity
interest in Developer  pursuant to a private offering of Developer's  securities
exempted from  registration  under such Act,  provided that  Developer  provides
Franchisor  with a copy of its prospectus  and/or  offering  memorandum ten (10)
days  prior to its  filing  with  the  Securities  and  Exchange  Commission  or
circulation  to third parties so that  Franchisor may comment and, if necessary,
correct any information  concerning  Franchisor  and/or the System,  and further
provided  that after giving effect to any such public or private  offering,  the
Principal  Shareholders,  or any of them, "control"  Developer.  For purposes of
this Section 8, "control"  means either (1) owning legal and equitable  title to
fifty-one  percent  (51%)  or  more  of the  outstanding  voting  securities  of
Developer,  which are not  subject to a proxy  granted to or  contract  with any
other person or party  granting that party the right to vote part or all of such
securities,  or (2) having and  continually  exercising  the  contractual  power
presently to designate a majority of the directors of Developer.

                                      E-19
<PAGE>


    8.4  "Interest"  shall  mean:  when  referring  to  interests  or  rights in
Developer,  any shares of Developer's  stock,  and any other  equitable or legal
right in or to any of  Developer's  stock,  revenues,  profits or  assets;  when
referring  to  rights  or  assets of  Developer,  Developer's  rights  under and
interest in this Agreement, any Restaurant and its revenues, profits and assets.

    8.5  (a) The Interest of a Principal Shareholder  may be transferred to such
Principal  Shareholder's  spouse or children or to a person  designated  in such
Principal Shareholder's will or trust (individually and collectively referred to
as  "Successor"),   upon  such  Principal   Shareholder's   death  or  permanent
incapacity,  without Franchisor's  approval,  provided that such Successor shall
agree to be bound by the restrictions contained in this Section 8, and the other
agreements  and  covenants  of the  Principal  Shareholders  contained  in  this
Agreement.

         (b)  The Interest of a Principal Shareholder  may not be transferred to
another Principal Shareholder without Franchisor's approval, which approval will
not be unreasonably withheld.

         (c)  The Interest of a Successor may only be transferred  in accordance
with  Subsection  8.5(b) or 8.8,  regardless  of whether  such  Transfer  is for
consideration or by gift or will or other device.

    8.6  Until such date as  Developer  has developed  and opened for  operation
forty percent  (40%) of the number of  Restaurants  required by  Subsection  2.1
hereof and the number of  Restaurants  required by Subsection 3.1 hereof as said
total aggregate number is set forth on Appendix A, Developer shall have no right
to Transfer this  Agreement or any rights or obligations  under this  Agreement,
and any franchise agreements to be issued pursuant hereto shall be issued solely
to the  Developer,  which  as of the date of  issuance  of each  such  franchise
agreement   shall  be  owned  by  the  Principal   Shareholders  to  the  extent
hereinbefore  provided.  Any transfer or attempted  transfer in contravention of
this provision shall be void and of no effect.  If, after the date Developer has
developed and opened for continuous operation the number of Restaurants required
by this Subsection 8.6, the Principal  Shareholders  desire to dispose of all or
substantially  all of the Interests of the Principal  Shareholders in Developer,
or the  Principal  Shareholders  (or  Developer)  desire  to  dispose  of all or
substantially  all of  Developer's  Interest in this  Agreement or in the assets
which  Developer  has  acquired  pursuant  to  this  Agreement,   the  Principal
Shareholders or Developer,  as the case may be, shall notify  Franchisor of that
desire,  in writing,  thirty (30) days before  announcing  that fact publicly or
engaging the services of a broker or sales agent.

    8.7  (a)  If at any time any of the Principal Shareholders  or Developer, as
the case may be,  obtains from a third party or third  parties a bona fide offer
(the  "Offer") in writing for the  purchase of all or  substantially  all of the
Interests of the Principal Shareholders in Developer or in the Restaurant assets
which  Developer  has  acquired  as a result of this  Agreement,  the  Principal
Shareholders or Developer shall give notice (the "Selling Notice") to Franchisor
stating that the Principal  Shareholders or Developer,  as the case may be, have
received the Offer,  identifying the prospective  purchaser by name and address,
specifying the proposed purchase price and attaching a true and complete copy of
the Offer.  Notwithstanding  the  foregoing,  however,  Developer  and Principal
Shareholders  understand  and agree that, as provided in Subsection  8.6 hereof,
until such time as Developer  has  developed and opened for operation the number

                                      E-20
<PAGE>


of Restaurants required by said Subsection 8.6. hereof, any portion of any Offer
regarding  the right to develop  Restaurants  or  Developer's  Interest  in this
Agreement  shall  be  invalid  and of no  force or  effect,  it being  expressly
understood and agreed that such rights may not be transferred, and any franchise
agreements to be granted  hereunder  shall be issued solely to Developer,  which
shall be owned by the Principal  Shareholders as hereinbefore set forth. At such
time as  Developer  has  developed  and  opened  for  operation  the  number  of
Restaurants  required by Subsection  8.6, any portion of such an Offer regarding
Developer's Interest in this Agreement shall be effective in accordance with its
terms.

         (b)  Franchisor  shall  have an  option  to  purchase  (the  "Option"),
exercisable within a period of forty-five (45) days after receipt of the Selling
Notice (the "Option Period"),  such Interests at the price and on the conditions
set forth in the Offer, except that Franchisor shall not be obligated to pay any
finder's or broker's fee, and if the Offer provides for payment of consideration
other  than  cash,  or  if  the  Offer  involves  certain  intangible  benefits,
Franchisor may elect to purchase such Interests by offering a reasonable  dollar
value substitute including,  at Franchisor's option, cash or the common stock or
other  securities  of  the  Franchisor  or  any  combination   thereof  for  the
non-cash/intangible benefits part of the Offer.

         (c)  The Option shall be  exercisable  by Franchisor  delivering to the
Principal  Shareholders  or  Developer,  as the case may be,  within  the Option
Period,  a notice  (i)  stating  that the  Option is being  exercised,  and (ii)
specifying  the time,  date and place at which such  purchase and sale will take
place, which date shall be within forty-five (45) days after Franchisor delivers
such notice.  Developer  shall provide  Franchisor  access to and copies of such
information and  documentation  Franchisor shall request regarding the purchase.
The  forty-five  (45)  day  limitation  described  at the  end of the  preceding
sentence  shall not apply if at the end of said  forty-five  (45) day period the
only issue which  prevents  completion  of the  purchase and sale is the need to
effect  transfers  of the  applicable  liquor  licenses.  In the event of such a
delay,  the purchase  and sale shall take place  within seven (7) business  days
after those liquor licenses have been transferred.

         (d)  If the  Option is not  exercised,  the Principal  Shareholders  or
Developer,  as the case may be, may sell the Interests in or of Developer to the
third  party  which made the  Offer,  on  conditions  no more  favorable  to the
third-party offerer than those set forth in the Offer,  provided that Franchisor
approves the proposed  transferee in  accordance  with the criteria set forth in
Appendix D and provided  further  that such sale takes place within  ninety (90)
days after the expiration of the Option  Period.  The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the issue which prevents  completion of the purchase and sale is
either the need to effect transfers of the applicable liquor licenses or consent
or approval of the transaction by a state or federal  regulatory  agency. In the
event of such a delay,  the  purchase and sale shall take place within seven (7)
business days after those issues have been resolved or waived by Franchisor.  In
the event of such a  transfer,  Franchisor  may, in its  discretion,  require an
amendment to Subsection  2.1 of this  Agreement in order to increase or decrease
the  number  of  restaurants  required  thereby  and the  dates  of the  Initial
Development Periods referred to therein.

         (e)  If the  Option is not exercised,  the  Principal  Shareholders  or
Developer, as the case may be, shall immediately notify Franchisor in writing of
any change in the terms of an Offer.  Any change in the terms of an Offer  shall

                                      E-21
<PAGE>


cause it to be deemed a new  Offer,  conferring  upon  Franchisor  a new  Option
pursuant to this  Subsection  8.7;  the Option  Period  with  respect to the new
Option  shall be  deemed to  commence  on the day on which  Franchisor  receives
written notice of a change in the terms of the original Offer. Provided however,
in such an instance,  Franchisor  shall provide  Franchisee its response  within
fifteen  (15) days  after  Franchisor's  receipt of all of the  modified  terms,
unless such  changes are deemed  material  by  Franchisor  and in such an event,
Franchisor  shall have a forty-five  (45) day period within which to review said
changes.

    8.8  (a)  Developer understands and acknowledges  that the rights and duties
set forth in this  Agreement are personal to Developer and that  Franchisor  has
entered  into this  Agreement in reliance on the  business  skill and  financial
capacity of Developer, and the business skill, financial capability and personal
character of each Principal Shareholder. Any transfer of Principal Shareholders'
Interest  in  Developer  or  in  Developer's   Interest  in  this  Agreement  in
contravention  of this Section 8 shall cause the  immediate  termination  of all
development rights granted herein with respect to Restaurants not otherwise open
for  operation.  Except as otherwise  set forth in this Section 8, the Principal
Shareholders shall at all times retain control of Developer. Except as otherwise
provided in this Section 8, no Transfer of any part of  Developer's  Interest in
this  Agreement,  and no Transfer of any Interest of any  Principal  Shareholder
shall be completed  except in accordance  with this Subsection 8.8. In the event
of  such a  proposed  Transfer  of any  part  of  Developer's  Interest  in this
Agreement, or of any Interest of any Principal Shareholder, the party or parties
desiring to effect such Transfer shall give Franchisor  notice in writing of the
proposed  Transfer,  which  notice  shall set forth the name and  address of the
proposed transferee, its financial condition,  including a copy of its financial
statement dated not more than ninety (90) days prior to the date of said notice,
and all the terms and conditions of the proposed  Transfer.  Upon receiving such
notice, Franchisor may (i) approve the Transfer, or (ii) withhold its consent to
the Transfer.  Franchisor  shall,  within forty-five (45) days of receiving such
notice and all the  information  required  therein,  advise the party or parties
desiring to effect the Transfer  whether it (1) approves  the  Transfer,  or (2)
withholds its consent to the Transfer,  giving the reasons for such disapproval.
Failure of Franchisor to so advise said party or parties within that  forty-five
(45) day  period  shall be  deemed  to be  approval  of the  proposed  Transfer.
Appendix D sets  forth the  criteria  for  obtaining  Franchisor's  consent to a
proposed Transfer.

         (b)  In the  event  that  Franchisor approves  the  Transfer,  and  the
Transfer is not completed within ninety (90) days of the later of (i) expiration
of the  forty-five  (45) day  notice  period,  or (ii)  delivery  of  notice  of
Franchisor's  approval of the proposed  Transfer,  Franchisor's  approval of the
proposed Transfer shall automatically be revoked. The ninety (90) day limitation
described in the preceding sentence shall not apply if at the end of said ninety
(90) day period the only issue which prevents  completion of the Transfer is the
need to effect transfers of the applicable liquor licenses. In the event of such
a delay,  the Transfer  shall take place  within  seven (7) business  days after
those liquor licenses have been transferred. Any subsequent proposal to complete
the  proposed  Transfer  shall be subject to  Franchisor's  right of approval as
provided herein.  The party which desires to effect the proposed  Transfer shall
immediately  notify  Franchisor  in  writing  of any  change  in the  terms of a
Transfer.  Any change in terms of a Transfer  prior to closing shall cause it to
be deemed a new Transfer,  revoking any approval  previously given by Franchisor
and conferring upon Franchisor a new right to approve such Transfer, which shall
be deemed to commence on the day on which Franchisor  receives written notice of
such change in terms.

                                      E-22
<PAGE>


    8.9  In connection with any request for Franchisor's  approval of a proposed
Transfer  to this  Section 8, the  parties to the  proposed  Transfer  shall pay
Franchisor  a  nonaccountable  fee to defray the  actual  cost of review and the
administrative  and professional  expenses related to the proposed  Transfer and
the preparation  and execution of documents and  agreements,  up to a maximum of
two thousand five hundred dollars ($2,500).

9.  TERMINATION

    9.1  This Agreement shall expire on  _______________, 20____,  unless sooner
terminated pursuant to the terms hereof.

    9.2  Franchisor shall have the right to terminate this Agreement immediately
upon written notice to Developer  stating the reason for such  termination,  and
Developer shall no longer have any of the rights created by this  Agreement,  in
the event of:

         (a)  development by Developer of a Restaurant  without first  obtaining
    approval  from   Franchisor  of  the  Restaurant   site  or  of  Developer's
    architectural and/or engineering plans in accordance with Section 5 hereof;

         (b)  any breach  or default of  any of the provisions of Sections 8 and
    11 of this Agreement and Subsection 14.1 of any franchise agreement  entered
    into pursuant to this Agreement;

         (c)  the   filing  by  Developer   of  a  petition  in  bankruptcy,  an
    arrangement for the benefit of  creditors, or a petition for reorganization;
    the filing against Developer of a petition in bankruptcy, an arrangement for
    the benefit  of  creditors, or petition  for  reorganization,  not dismissed
    within  ninety (90) days of the filing  thereof; the making of an assignment
    by Developer for the  benefit of creditors; or the appointment of a receiver
    or trustee for Developer, which  receiver  or  trustee  shall  not have been
    dismissed within ninety (90) days of such appointment;

         (d)  the  discovery by  Franchisor  that  Developer  made any  material
    misrepresentation  or omitted any material fact in the information which was
    furnished to Franchisor in connection with this Agreement;

         (e)  failure by Developer to locate and employ a Director of Operations
    who is approved by  Franchisor  in accordance  with  Subsection  12.2 within
    ninety  (90)  days of the  date of this  Agreement  or,  with  respect  to a
    replacement  Director of  Operations,  failure by Developer to locate such a
    replacement who is approved by Franchisor in accordance with Subsection 12.2
    within one hundred  eighty (180) days of the date on which the last Director
    of  Operations  who was  approved  by  Franchisor  ceased to be  employed by
    Developer in that capacity;

         (f)  any  part of this Agreement  relating  to the  payment  of fees to
    Franchisor,  or the preservation of any of Franchisor's trade names, service
    marks,  trademarks,  trade secrets or secret formulae  licensed or disclosed
    hereunder or under any franchise agreement between Franchisor and Developer,
    for any reason being declared invalid or unenforceable;

                                      E-23
<PAGE>


         (g)  Developer  or any  Principal  Shareholder  being  convicted  of or
    pleading nolo contendere to a felony or any crime involving moral turpitude;
    or

         (h)  the franchisee under any franchise agreement  executed pursuant to
    this Agreement  committing a default subject to immediate  termination under
    the franchise agreement.

    9.3  Except as  provided above in  Subsection 9.2, if  Developer defaults in
the performance or observance of any of its other obligations hereunder or under
any franchise agreement between Developer and  Franchisor,  and any such default
continues  for a period of thirty (30) days after  written  notice to  Developer
specifying  such  default,  Franchisor  shall have the right to  terminate  this
Agreement  upon  written  notice to  Developer.  If  Developer  defaults  in the
performance or observance of the same  obligation two (2) or more times within a
twelve (12) month  period,  Franchisor  shall have the right to  terminate  this
Agreement immediately upon commission of the second act of default, upon written
notice to Developer stating the reason for such  termination,  without allowance
for any curative period.

    9.4  This Agreement shall automatically terminate under the conditions and
at the times specified in Subsection 2.3 and 3.3.

10. PREREQUISITES TO OBTAINING FRANCHISES FOR INDIVIDUAL RESTAURANT UNITS

    10.1 Developer  understands  and  agrees that this Agreement does not confer
upon Developer a right to obtain a franchise for any Restaurant, but is intended
by the parties to set forth the terms and conditions  which, if fully satisfied,
shall  entitle  Developer  to  obtain  such  a  franchise,  located  within  the
Territory. Developer further understands that until the date Developer opens for
operation all those Restaurants required under Subsection 8.6 of this Agreement,
such aforesaid  terms and conditions may only be satisfied by Developer (and not
an  assignee or  transferee  thereof),  who shall  remain at all times owned and
controlled by the Principal Shareholders as herein set forth.

    10.2 In the event that Developer shall have obtained  Franchisor's  approval
of a  particular  proposed  site for a  Restaurant,  and if  Franchisor,  in the
exercise of its sole discretion,  has granted Developer  operational,  financial
and legal  approval,  then  Franchisor  will grant  Developer a franchise  for a
Restaurant  at the  site in  question.  As used  herein,  Franchisor  will  give
Developer  "operational",  "financial" and "legal"  approval under the following
circumstances:

    "Operational" approval will be granted if Franchisor has determined,  in the
    exercise of its sole discretion,  that Developer is conducting the operation
    of each of its  Restaurants,  and is capable of conducting  the operation of
    the  proposed  Restaurant,   including  physical  aspects  thereof,  (a)  in
    accordance  with  the  terms  and  conditions  of  this  Agreement,  (b)  in
    accordance with the provisions of the respective franchise  agreements,  and
    (c) in accordance  with the  standards,  specifications  and  procedures set
    forth and  described  in the  Franchise  Operations  Manual and in any other
    materials or manuals  provided or made  available to Developer by Franchisor

                                      E-24
<PAGE>


    (collectively,  the  "Manuals"),  as such may be amended  from time to time.
    Developer  understands  that changes in said standards,  specifications  and
    procedures  may  become  necessary  from time to time.  Developer  agrees to
    accept said changes, and Developer further agrees that it is within the sole
    discretion of Franchisor to make said changes.

    "Financial"  approval  will be granted if (a)  Developer is not in breach of
    its obligations  under  Subsection 7.3 hereof and has been and is faithfully
    performing  all terms and  conditions  under each of its existing  franchise
    agreements  with  Franchisor,  (b)  Developer  or its  affiliates  is not in
    default of any money  obligations  owed to Franchisor,  and (c) Developer is
    not in default of any financial  obligation to any of its suppliers,  unless
    any  such  obligation  is being  disputed  in good  faith by the  Developer.
    Developer  acknowledges and agrees that it is vital to Franchisor's interest
    that each of its  franchisees  be  financially  sound to avoid  failure of a
    franchised  business (which would  adversely  affect the reputation and good
    name of Franchisor and the System).  Developer  acknowledges and agrees that
    it is vital to Franchisor's interest and to the interests of the System that
    Developer (in its capacity as  franchisee)  remain current in satisfying its
    financial obligations to it suppliers.

    "Legal"  approval  will be  granted if  Franchisor  has  determined,  in the
    exercise of its sole discretion, that Developer has submitted to Franchisor,
    in a timely manner as requested,  all information and documents requested by
    Franchisor prior to and as a basis for the issuance of individual franchises
    or pursuant to any right granted to  Franchisor by this  Agreement or by any
    franchise  agreement  between  Developer and Franchisor,  and has taken such
    additional actions in connection  therewith as may be requested from time to
    time.

    10.3 It is understood  and agreed that the foregoing  criteria  apply to the
operational,  financial  and  legal  aspects  of any  Restaurant  franchised  by
Franchisor  in which  Developer or any  Principal  Shareholder  has any legal or
equitable  interest.  It is further  understood  and agreed that  Developer  and
Principal Shareholders have an ongoing responsibility to operate each Restaurant
in which  Developer  or any  Principal  Shareholder  has any legal or  equitable
interest in a manner which satisfies the foregoing requirements for operational,
financial and legal approval.

11. RESTRICTIONS

    11.1 Developer and its Principal Shareholders acknowledge that over the term
of this Agreement they are to receive  proprietary  information which Franchisor
has developed over time at great expense, including, but not limited to, methods
of site  selection,  marketing  methods,  product  analysis and  selection,  and
service  methods  and  skills  relating  to the  development  and  operation  of
Restaurants. They further acknowledge that this information, which includes, but
is not necessarily  limited to, that contained in the Manuals,  is not generally
known in the industry and is beyond their own present skills and experience, and
that to develop it themselves would be expensive,  time-consuming and difficult.
Developer and Principal  Shareholders  further acknowledge that the Franchisor's
information provides a competitive advantage and will be valuable to them in the
development  of their  business,  and that  gaining  access to it is therefore a
primary reason why they are entering into this Agreement. Accordingly, Developer
and its Principal Shareholders agree that Franchisor's information, as described

                                      E-25
<PAGE>


above,  which  may or may  not be  "trade  secrets"  under  prevailing  judicial
interpretations  or statutes,  is private and valuable,  and  constitutes  trade
secrets   belonging  to  Franchisor;   and  in   consideration  of  Franchisor's
confidential disclosure to them of these trade secrets,  Developer and Principal
Shareholders agree as follows:

         (a)  During  the  term of this  Agreement,  neither  Developer  nor any
    Principal  Shareholder,  for so long as such Principal  Shareholder  owns an
    Interest in Developer, may, without the prior written consent of Franchisor,
    directly or  indirectly  engage in, or acquire any  financial or  beneficial
    interest  (including  any interest in  corporations,  partnerships,  trusts,
    unincorporated  associations or joint ventures) in, advise,  help, guarantee
    loans or make  loans to,  any  restaurant  business  whose menu or method of
    operation is similar to that employed by restaurant  units within the System
    which is either (i) located in the  Territory,  (ii)  located in the Area of
    Dominant Influence (as defined and established from time to time by Arbitron
    Ratings  Company) of any Restaurant  developed  pursuant to this  Agreement,
    (iii) located  within a five (5) mile radius of any  restaurant  unit within
    the System,  or (iv)  determined by Franchisor,  exercising  reasonable good
    faith judgment, to be a direct competitor of the System.

         (b)  Neither Developer,  for two (2) years following the termination of
    this Agreement,  nor any Principal Shareholder,  for two (2) years following
    the  termination  of  all  of  his  or  her  Interest  in  Developer  or the
    termination  of this  Agreement,  whichever  occurs  first,  may directly or
    indirectly  engage in, or  acquire  any  financial  or  beneficial  interest
    (including   any   interest   in   corporations,    partnerships,    trusts,
    unincorporated  associations or joint ventures) in, advise,  help, guarantee
    loans or make  loans to,  any  restaurant  business  whose menu or method of
    operation is similar to that employed by restaurant  units within the System
    which is located either (i) in the  Territory,  (ii) in the Area of Dominant
    Influence (as defined and established  from time to time by Arbitron Ratings
    Company)  of any  Restaurant  developed  pursuant to this  Agreement,  (iii)
    within a five (5) mile radius of any restaurant  unit within the System,  or
    (iv)  within any area for which an  active,  currently  binding  development
    agreement  has been granted by  Franchisor  to another  franchisee as of the
    date of termination.

    11.2 Neither Developer nor any Shareholder shall at any time (a) appropriate
or use the trade secrets  incorporated in the System, or any portion thereof, in
any other  restaurant  business which is not within the System,  (b) disclose or
reveal  any  portion  of the  System to any  person  other  than to  Developer's
employees  as an  incident of their  training,  (c) acquire any right to use any
name, mark or other intellectual property right which may be granted pursuant to
any agreement  between  Franchisor and Developer,  except in connection with the
operation of a Restaurant, or (d) communicate, divulge or use for the benefit of
any other person or entity any confidential  information,  knowledge or know-how
concerning the methods of development or operation of a restaurant utilizing the
System,  which  may  be  communicated  by  Franchisor  in  connection  with  the
Restaurants to be developed hereunder.

    11.3 Developer and Principal  Shareholders agree that the provisions of this
Section 11 are and have been a primary  inducement  to  Franchisor to enter into
this  Agreement,  and that in the event of breach  thereof  Franchisor  would be
irreparably  injured and would be without an adequate remedy at law.  Therefore,
in the event of a breach,  or a threatened or attempted  breach,  of any of such

                                      E-26
<PAGE>


provisions Franchisor shall be entitled, in addition to any other remedies which
it may have  hereunder or in law or in equity  (including the right to terminate
this Agreement),  to a preliminary and/or permanent  injunction and a decree for
specific performance of the terms hereof without the necessity of showing actual
or  threatened  damage,  and without  being  required to furnish a bond or other
security.

    11.4 The restrictions  contained in Subsection 11.1 above shall not apply to
ownership of less than two percent (2%) of the shares of a company  whose shares
are listed and traded on a national securities exchange if such shares are owned
for  investment  only,  and are not owned by an officer,  director,  employee or
consultant of such publicly traded company.

    11.5 If any court or other  tribunal  having  jurisdiction  to determine the
validity  or  enforceability  of this  Section  11  determines  that it would be
invalid or unenforceable as written,  then the provisions hereof shall be deemed
to be modified or limited to such extent or in such manner as necessary for such
provisions to be valid and enforceable to the greatest extent possible.

12. DEVELOPMENT PROCEDURES

    12.1 Franchisor  will use its reasonable  efforts to furnish  Developer with
advice in developing Restaurants and in selecting sites therefor.

    12.2 Developer  shall  designate  an  individual   employee  who  shall   be
personally  responsible  for  Developer's  activities  during  the  term of this
Agreement, and who shall devote his or her full-time,  best efforts and constant
personal  attention,  on a day-to-day  basis,  to Developer's  activities in the
Territory  (the  "Director of  Operations").  Developer  shall  require that the
Director of Operations  maintain his or her principal  personal residence in the
Territory.  Franchisor reserves the right to require that, as a condition of his
or her employment  with Developer,  the Director of Operations,  as well as each
supervisory employee referred to in Subsection 12.3, must successfully  complete
Franchisor's  interview  process and a  psychological  profile  test in a manner
which satisfies a uniform standard established by Franchisor.  The test shall be
administered by Franchisor,  or by a testing agency designated by Franchisor, at
Developer's   expense.   Developer's   designation  of  the  first  Director  of
Operations,  and any subsequent Director of Operations,  shall be subject to the
written  approval  of  Franchisor,  which  approval  shall  not  be  arbitrarily
withheld,  and  shall  also be  subject  to the time  limitations  described  in
Subsection  9.2(e) hereof.  Franchisor  shall notify Developer in writing within
fourteen (14) business days of receipt of Developer's request whether Franchisor
disapproves  such person.  Failure by Franchisor to so notify  Developer  within
that period shall be deemed to constitute Franchisor's approval of such person.

    12.3 In the event  that  Developer  desires to  designate  an  employee  (in
addition to the Director of Operations) who will have supervisory authority over
the  development  of  operation  of more  than  one (1)  Restaurant  within  the
Territory,  Developer's  designation  of such a  supervisory  employee  shall be
subject to the  written  approval of  Franchisor,  which  approval  shall not be
arbitrarily  withheld.  Franchisor  shall  notify  Developer  in writing  within
fourteen (14) business days of receipt of Developer's request whether Franchisor

                                      E-27
<PAGE>


disapproves  such person.  Failure by Franchisor to so notify  Developer  within
that period shall be deemed to constitute  Franchisor's approval of such person.
Developer shall require that any such supervisory  employee  maintain his or her
principal personal residence in the Territory.

    12.4 Developer  shall  require  the  Director  of  Operations  to  execute a
confidentiality  agreement  and  covenant  not to compete  in the form  attached
hereto as Appendix E. In addition,  at  Franchisor's  request,  Developer  shall
obtain  from the  Director  of  Operations  an  agreement  verifying  his or her
employment status. Developer shall require that each other employee of Developer
who will have  supervisory  authority over the  development or operation of more
than one (1) Restaurant execute a confidentiality agreement in the form attached
hereto as Appendix F.  Developer  shall be  responsible  for  compliance  of its
employees  with the  agreements  identified  in this  Subsection,  including the
payment of any costs needed to enforce the obligations.

    12.5 (a)  Developer  shall require its Director of Operations  and any other
supervisory  employee  designated  pursuant to Subsection  12.3 to attend and to
successfully  complete to  Franchisor's  reasonable  satisfaction  an operations
training  course  provided by  Franchisor.  If the Director of Operations or any
such supervisory employee fails to successfully complete Franchisor's operations
training  course,  Franchisor  may  require  designation  of a new  Director  of
Operations  or  replacement  supervisory  employee,  as the  case  may  be,  and
Developer   shall   designate  a  new  Director  of  Operations  or  replacement
supervisory  employee  who  shall be  required  to  successfully  complete  such
training course.

         (b)  The Director of Operations  and  supervisory employees  designated
pursuant to Subsection 12.3 shall, from time to time as reasonably  requested by
Franchisor,   attend  and  successfully  complete  to  Franchisor's   reasonable
satisfaction a Franchisor-provided refresher course in restaurant operations.

    12.6 With  respect to each  Restaurant  within the  Territory  developed  by
Developer,   Developer's   employees  must  satisfy  the  training  requirements
described  in Section 6 of  Appendix B hereto.  After  Developer  opens it first
Restaurant pursuant to this Agreement, Franchisor may at its option, and subject
to  such  conditions  as  Franchisor  deems  necessary,   permit  Developer  (at
Developer's own expense) to conduct a portion of the required training at one of
Developer's existing Restaurants.  In that event,  Developer will be required to
provide qualified personnel to administer training tests and to maintain records
relating to the training and performance of employees.


13. NO WAIVER OF DEFAULT

    13.1 The waiver by any party to this Agreement of any breach or default,  or
series of breaches or defaults, of any term, covenant or condition herein, or of
any same or similar term, covenant or condition contained in any other agreement
between  Franchisor  and any other  person,  shall not be deemed a waiver of any
subsequent  or  continuing  breach or  default  of the same or any  other  term,
covenant or  condition  in this  Agreement,  or in any other  agreement  between
Franchisor and any other person.

                                      E-28
<PAGE>


    13.2 All rights and  remedies  of  Franchisor  shall be  cumulative  and not
alternative,  in addition to and not  exclusive  of any other rights or remedies
which are  provided  for herein or which may be available at law or in equity in
case of any breach,  failure or default or threatened breach, failure or default
of any term,  provision or condition of this Agreement.  Franchisor's rights and
remedies  shall be continuing  and shall not be exhausted by any one (1) or more
uses thereof,  and may be exercised at any time or from time to time as often as
may be expedient; and any option or election to enforce any such right or remedy
may be exercised or taken at any time and from time to time.  The  expiration or
earlier  termination of this Agreement shall not discharge or release  Developer
or any Principal  Shareholder from any liability or obligation then accrued,  or
any liability or obligation continuing beyond, or arising out of, the expiration
or earlier termination of this Agreement.

14. FORCE MAJEURE

    14.1 As used in this Agreement,  the term "Force Majeure" shall mean any act
of God,  strike,  lock-out or other  industrial  disturbance,  war  (declared or
undeclared),  riot, epidemic,  fire or other catastrophe,  act of any government
and any other  similar  cause  not  within  the  control  of the party  affected
thereby.

    14.2 If the  performance of any obligation by any party under this Agreement
is prevented or delayed by reason of Force Majeure,  which cannot be overcome by
use of normal  commercial  measures,  the  parties  shall be  relieved  of their
respective  obligations to the extent the parties are  respectively  necessarily
prevented  or  delayed  in such  performance  during  the  period of such  Force
Majeure.  The party whose  performance  is affected by an event of Force Majeure
shall give  prompt  notice of such  Force  Majeure  event to the other  party by
facsimile,  telephone  or telegram  (in each case to be  confirmed  in writing),
setting forth the nature  thereof and an estimate as to its duration,  and shall
be liable for  failure to give such  timely  notice only to the extent of damage
actually caused.

15. CONSTRUCTION, SEVERABILITY, GOVERNING LAW AND JURISDICTION

    15.1 If any part of this Agreement shall for any reason be declared invalid,
unenforceable  or impaired in any way,  the validity of the  remaining  portions
shall  remain in full force and effect as if this  Agreement  had been  executed
with such invalid portion eliminated, and it is hereby declared the intention of
the  parties  that they  would  have  executed  the  remaining  portion  of this
Agreement  without  including  therein any such portions which might be declared
invalid;  provided  however,  that in the event any part hereof  relating to the
payment of fees to Franchisor,  or the preservation of any of Franchisor's trade
names, service marks,  trademarks,  trade secrets or secret formulae licensed or
disclosed  hereunder or pursuant to any franchise  agreement between  Franchisor
and  Developer  is for  any  reason  declared  invalid  or  unenforceable,  then
Franchisor  shall have the option of  terminating  this  Agreement  upon written
notice to Developer.  If any clause or provision  herein would be deemed invalid

                                      E-29
<PAGE>


or  unenforceable  as  written,  it shall be deemed to be modified or limited to
such  extent or in such  manner as may be  necessary  to  render  the  clause or
provision  valid and enforceable to the greatest extent possible in light of the
interest of the parties  expressed in that clause or  provision,  subject to the
provisions of the preceding sentence.

    15.2 DEVELOPER AND PRINCIPAL  SHAREHOLDERS  ACKNOWLEDGE  THAT FRANCHISOR MAY
ENTER INTO OTHER  DEVELOPMENT  AGREEMENTS  THROUGHOUT THE UNITED STATES ON TERMS
AND CONDITIONS  SIMILAR TO THOSE SET FORTH IN THIS AGREEMENT,  AND THAT IT IS OF
MUTUAL BENEFIT TO DEVELOPER AND PRINCIPAL  SHAREHOLDERS  AND TO FRANCHISOR  THAT
THESE TERMS AND  CONDITIONS  BE UNIFORMLY  INTERPRETED.  THEREFORE,  THE PARTIES
AGREE THAT TO THE EXTENT THAT THE LAW OF THE STATE OF KANSAS  DOES NOT  CONFLICT
WITH LOCAL FRANCHISE STATUTES, RULES AND REGULATIONS,  KANSAS LAW SHALL APPLY TO
THE  CONSTRUCTION  OF THIS AGREEMENT AND SHALL GOVERN ALL QUESTIONS  WHICH ARISE
WITH REFERENCE HERETO; PROVIDED HOWEVER, THAT PROVISIONS OF KANSAS LAW REGARDING
CONFLICTS OF LAW SHALL NOT APPLY HERETO.

    15.3 THE PARTIES AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF
OR  RELATING  TO THIS  AGREEMENT  OR THE  PERFORMANCE  THEREOF  WHICH  CANNOT BE
AMICABLY SETTLED, EXCEPT AS OTHERWISE PROVIDED HEREIN, MAY, AT THE OPTION OF THE
CLAIMANT, BE RESOLVED BY A PROCEEDING IN A COURT IN JOHNSON COUNTY,  KANSAS, AND
DEVELOPER  AND  THE  PRINCIPAL   SHAREHOLDERS   EACH   IRREVOCABLY   ACCEPT  THE
JURISDICTION OF THE COURTS OF THE STATE OF KANSAS AND THE FEDERAL COURTS SERVING
JOHNSON COUNTY, KANSAS FOR SUCH CLAIMS, CONTROVERSIES OR DISPUTES.

    The parties agree that service of process in any  proceeding  arising out of
or  relating  to this  Agreement  or the  performance  thereof may be made as to
Developer and any Principal  Shareholder by serving a person of suitable age and
discretion  (such as the  person in  charge of the  office)  at the  address  of
Developer  specified  in this  Agreement  and as to  Franchisor  by serving  the
president or a  vice-president  of Franchisor at the address of Franchisor or by
serving Franchisor's registered agent.

16. MISCELLANEOUS

    16.1 All notices and other communications  required or permitted to be given
hereunder shall be deemed given when delivered in person,  by overnight  courier
service,  facsimile  transmission  or mailed by  registered  or  certified  mail
addressed to the  recipient  at the address set forth  below,  unless that party
shall have given written  notice of change of address to the sending  party,  in
which event the new address so specified shall be used.

                                      E-30
<PAGE>


    FRANCHISOR:    Applebee's International, Inc.
                   4551 W. 107th Street, Suite 100
                   Overland Park, Kansas  66207
                   Attention:  President


    DEVELOPER:     ______________________________

                   ______________________________

                   ______________________________


    PRINCIPAL SHAREHOLDERS:  ______________________________

                             ______________________________


    16.2 All terms used in this  Agreement,  regardless of the number and gender
in which they are used,  shall be deemed  and  construed  to  include  any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context or sense of this Agreement may require, the same as if such words
had been written in this  Agreement  themselves.  The headings  inserted in this
Agreement are for reference  purposes only and shall not affect the construction
of this  Agreement or limit the  generality of any of its  provisions.  The term
"business  day"  means any day other than  Saturday,  Sunday,  or the  following
national  holidays:  New  Year's  Day,  Martin  Luther  King  Day,  Washington's
Birthday,  Memorial Day,  Independence Day, Labor Day,  Columbus Day,  Veterans'
Day, Thanksgiving and Christmas.

    16.4 This Agreement,  the Uniform Franchise  Offering Circular  currently in
effect and the  documents  referred to herein  constitute  the entire  agreement
between parties, superseding and canceling any and all prior and contemporaneous
agreements, understandings, representations, inducements and statements, oral or
written, of the parties in connection with the subject matter hereof.

    16.5 Except as expressly  authorized herein, no amendment or modification of
this Agreement  shall be binding  unless  executed in writing both by Franchisor
and by Developer and Principal Shareholders.

    16.6 In the  event  that any  party to this  Agreement  initiates  any legal
proceeding to construe or enforce any of the terms, conditions and/or provisions
of this Agreement, including, but not limited to, its termination provisions, or
to obtain  damages or other  relief to which any party may be entitled by virtue
of this Agreement,  the prevailing party or parties shall be paid its reasonable
attorneys' fees and expenses by other party or parties.

                                      E-31
<PAGE>


    IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement as of
the date first above written.

                                           FRANCHISOR:

ATTEST:                                    APPLEBEE'S INTERNATIONAL, INC.

_______________________________________    By: _________________________________
Name: _________________________________    Name: _______________________________
Title: ________________________________    Title:_______________________________


                                           DEVELOPER:

ATTEST:                                    _____________________________________

Name: _________________________________    Name: _______________________________
Title: ________________________________    Title:_______________________________



                                           PRINCIPAL SHAREHOLDER(S):


_______________________________________    _____________________________________
Witness                                    Name: _______________________________

_______________________________________    _____________________________________
Witness                                    Name: _______________________________

_______________________________________    _____________________________________
Witness                                    Name: _______________________________


                                      E-32
<PAGE>




                       APPENDIX A TO DEVELOPMENT AGREEMENT

                                    TERRITORY



















    Franchisor specifically excludes from the Territory,  and reserves the right
    to operate  or  license  any other  person to  operate  restaurants  in, any
    location  within an  airport  (serviced  by one or more  public  or  charter
    carrier),  arena, stadium, state or national park, or military fort, post or
    base which may be within the boundaries of the Territory  otherwise  granted
    to Developer.








         One hundred  percent  (100%) of the number of  Restaurants  required by
    Subsections 2.1 and 3.1 is __________ (_____).

                                      E-33
<PAGE>


                       APPENDIX B TO DEVELOPMENT AGREEMENT


                            FORM FRANCHISE AGREEMENT

                    (See Exhibit F to this Offering Circular)



                                      E-34
<PAGE>


                       APPENDIX C TO DEVELOPMENT AGREEMENT

                        STATEMENT OF OWNERSHIP INTERESTS





                                                Percent of Issued and
         Shareholder                       Outstanding Shares of Developer










                                      E-35
<PAGE>


                       APPENDIX D TO DEVELOPMENT AGREEMENT

                  REVIEW AND CONSENT WITH RESPECT TO TRANSFERS


    In  determining  whether  to  grant or to  withhold  consent  to a  proposed
Transfer,  Franchisor shall consider all of the facts and circumstances which it
views as relevant in the particular instance, including, but not limited to, any
of the following:  (i) work experience and aptitude of Proposed New Owner and/or
proposed new  management  (a proposed  transferee  of a Principal  Shareholder's
Interest  and/or a proposed  transferee  of this  Agreement  is  referred  to as
"Proposed New Owner");  (ii) financial  background and condition of Proposed New
Owner,  and  actual  and pro  forma  financial  condition  of  Developer;  (iii)
character and reputation of Proposed New Owner;  (iv)  conflicting  interests of
Proposed New Owner; (v) the terms and conditions of Proposed New Owner's rights,
if the  proposed  Transfer is a pledge or  hypothecation;  (vi) the  adequacy of
Developer's  operation (as Franchisee) of any Restaurant and compliance with the
System and this  Agreement;  and (vii) such other  criteria  and  conditions  as
Franchisor shall then consider  relevant in the case of an application for a new
franchise to operate a restaurant unit within the System by an applicant that is
not then currently doing so.  Franchisor's  consent also may be conditioned upon
execution  by Proposed  New Owner of an  agreement  whereby  Proposed  New Owner
assumes  full,  unconditional,  joint and several  liability  for, and agrees to
perform  from  the  date  of  such  Transfer,  all  obligations,  covenants  and
agreements  contained  herein to the same  extent as if it had been an  original
party  to  this   Agreement  and  may  also  require   Developer  and  Principal
Shareholders, including the proposed Transferor(s), to execute a general release
which releases Franchisor from any claims they may have had or then have against
Franchisor. In the event Proposed New Owner is a partnership (including, but not
limited to, a limited partnership),  Proposed New Owner will also be required to
execute an addendum to the  Agreement  which amends the  references to Developer
and its Principal Shareholders to include the partnership approved by Franchisor
and Proposed New Owner's  general  partner(s) and the principal  shareholders of
the  general  partner(s),  if the  general  partner(s)  is a  corporation.  This
addendum will contain a provision  including in the definition of "Transfer" the
withdrawal, removal or voluntary/involuntary  dissolution (if applicable) of the
general  partner(s) or the  substitution  or addition of a new general  partner.
Developer  or  Principal  Shareholders,  as  the  case  may  be,  shall  provide
Franchisor with such  information as it may require in connection with a request
for approval of a proposed Transfer.

                                      E-36
<PAGE>


                       APPENDIX E TO DEVELOPMENT AGREEMENT

                          CONFIDENTIALITY AGREEMENT AND
                             COVENANT NOT TO COMPETE


    THIS AGREEMENT is made this ________ day of ________________,  20______,  by
and between _______________________________________, a _____________ corporation
("Developer"),   and  __________________________,   an  individual  employed  by
Developer ("Employee").

WITNESSETH:

    WHEREAS,  APPLEBEE'S INTERNATIONAL,  INC. ("Applebee's") is the owner of all
rights  in  and  to a  unique  system  for  the  development  and  operation  of
restaurants (the "System"),  which includes proprietary rights in valuable trade
names,  service  marks and  trademarks,  including  the service mark  Applebee's
Neighborhood  Grill & Bar and variations of such mark, designs and color schemes
for restaurant premises, signs, equipment, procedures and formulae for preparing
food and  beverage  products,  specifications  for  certain  food  and  beverage
products,  inventory methods,  operating methods,  financial control concepts, a
training facility and teaching techniques;

    WHEREAS,   Developer  is  the  owner  of  the  exclusive  right  to  develop
restaurants  franchised by Applebee's  which utilize the System  ("Restaurants")
for the period  and in the  territory  described  in the  Development  Agreement
between Applebee's and Developer (the "Development Agreement");

    WHEREAS,  Developer and Employee acknowledge that Applebee's  information as
described above was developed over time at great expense, is not generally known
in the industry and is beyond Developer's own present skills and experience, and
that to develop it itself would be expensive, time-consuming and difficult, that
it provides a  competitive  advantage  and will be valuable to  Developer in the
development  of its  business,  and that  gaining  access to it was  therefore a
primary reason why Developer entered into the Development Agreement; and

    WHEREAS, in consideration of Applebee's confidential disclosure to Developer
of these trade  secrets,  Developer  has agreed to be  obligated by the terms of
Development  Agreement to execute,  with its Director of  Operations,  a written
agreement  protecting  Applebee's  trade  secrets and  confidential  information
entrusted to Employee, and protecting against unfair competition;

    NOW,  THEREFORE,  in  consideration  of the mutual covenants and obligations
contained herein, the parties agree as follows:

    (1)  The parties  acknowledge and agree that Employee is or will be employed
in a supervisory or managerial capacity and in such capacity will have access to
information and materials which  constitute  trade secrets and  confidential and
proprietary  information.  The parties  further  acknowledge  and agree that any
actual or potential direct or indirect competitor of Applebee's or of any of its
franchisees  shall  not have  access  to such  trade  secrets  and  confidential
information.

                                      E-37
<PAGE>


    (2)  The  parties  acknowledge  and  agree  that  the  System includes trade
secrets and  confidential information  which Applebee's  has  revealed  or  will
reveal to Developer in confidence, and that protection  of  said  trade  secrets
and  confidential  information  and  protection  of  Applebee's  against  unfair
competition from others who enjoy or who have had access to said  trade  secrets
and confidential information are essential for the  maintenance  of goodwill and
special value of the System.

    (3)  Employee agrees that he or she shall not at any time (i) appropriate or
use the trade secrets  incorporated in the System,  or any portion thereof,  for
use in any business which is not within the System;  (ii) disclose or reveal any
portion of the System to any person  other than to  Developer's  employees as an
incident  of their  training;  (iii)  acquire any right to use, or to license or
franchise the use of any name, mark or other  intellectual  property right which
is or  may  be  granted  by  any  franchise  agreement  between  Applebee's  and
Developer;  or (iv)  communicate,  divulge  or use for the  benefit of any other
person or entity any confidential information,  knowledge or know-how concerning
the  methods  of  development  or  operation  of  a  Restaurant   which  may  be
communicated  to  Employee  or of which  Employee  may be  apprised by virtue of
Employee's  employment by Developer.  Employee  shall divulge such  confidential
information  only to such of Developer's  other employees as must have access to
that  information  in order to operate a Restaurant  or to develop a prospective
site  for a  Restaurant.  Any  and  all  information,  knowledge  and  know-how,
including, without limitation,  drawings, materials, equipment,  specifications,
techniques and other data, which Applebee's designates as confidential, shall be
deemed confidential for purposes of this Agreement.

    (4)  Employee  agrees  that for the  duration  of his or her  employment  by
Developer,  and for two (2) years following  termination  thereof,  Employee may
not,  without the prior written  consent of Applebee's,  directly or indirectly,
for  himself  or  through,  on  behalf  of or in  conjunction  with any  person,
partnership  or  corporation,  engage in or acquire any  financial or beneficial
interest  (including  any  interest  in  corporations,   partnerships,   trusts,
unincorporated associations or joint ventures) in, advise, help, guarantee loans
or make loans to, any  restaurant  business whose menu or method of operation is
the same as or similar to that  employed by  restaurant  units within the System
which is located  either  (a) in the  Territory,  as defined in the  Development
Agreement,  or (b) in the Area of Dominant Influence (as defined and established
from time to time by  Arbitron  Ratings  Company)  of any  Restaurant  developed
pursuant to the Development Agreement.

    (5)  Employee further acknowledges and agrees that the Franchise  Operations
Manual  and any other  materials  and  manuals  provided  or made  available  to
Developer by Applebee's (collectively, the "Manuals"), described in Section 5 of
the  form  of  franchise  agreement  which  is  attached  as  Appendix  B to the
Development Agreement are loaned by Applebee's to Developer for limited purposes
only, remain the property of Applebee's,  and may not be reproduced, in whole or
in part, without the written consent of Applebee's.

    (6)  Employee  agrees to surrender to  Developer or to  Applebee's  each and
every copy of the  Manuals and any other  information  or material in his or her
possession or control upon request,  upon  termination  of  employment,  or upon
completion  of the use for which said Manuals or other  information  or material
may have been furnished to Employee.

                                      E-38
<PAGE>


    (7)  The  parties agree  that in the  event of a breach  of this  Agreement,
Applebee's would be irreparably  injured and would be without an adequate remedy
at law. Therefore,  in the event of a breach or a threatened or attempted breach
of any of the  provisions  hereof,  Applebee's  shall be entitled to enforce the
provisions of this  agreement as a third-party  beneficiary  hereof and shall be
entitled,  in addition to any other  remedies which it may have hereunder at law
or in equity (including the right to terminate the Development Agreement),  to a
temporary and/or permanent  injunction and a decree for specific  performance of
the terms hereof without the necessity of showing  actual or threatened  damage,
and without being required to furnish a bond or other security.

    (8)  The  restrictions in Subsection (4) hereof shall not apply to ownership
of less than two percent (2%) of the shares of a company whose shares are traded
on a national  securities exchange if such shares are owned for investment only,
and are not  owned by an  officer,  director,  employee  or  consultant  of such
publicly traded company.

    (9)  If any court or other tribunal  having  jurisdiction  to determine  the
validity or enforceability of this Agreement determines that it would be invalid
or  unenforceable  as  written,  the  provisions  hereof  shall be  deemed to be
modified  or  limited  to such  extent  or in such  manner  necessary  for  such
provisions to be valid and enforceable to the greatest extent possible.

    (10) In the event that any party to this  Agreement or Applebee's  initiates
any legal proceeding to construe or enforce any of the terms,  conditions and/or
provisions of this Agreement,  or to obtain damages or other relief to which any
party may be  entitled  by virtue of this  Agreement,  the  prevailing  party or
parties shall be paid its/their reasonable attorneys' fees and expenses by other
party or parties.

    IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement as of
the date first above written.

DEVELOPER:                             EMPLOYEE:


By:__________________________________  By:______________________________________
Name:________________________________  Name: ___________________________________
Title: ______________________________


                                      E-39
<PAGE>




                       APPENDIX F TO DEVELOPMENT AGREEMENT

                            CONFIDENTIALITY AGREEMENT

    THIS AGREEMENT is made this ________ day of ________________,  20_______, by
and   between    ________________________________________,    a    _____________
corporation  ("Developer"),   and   __________________________,   an  individual
employed by Developer ("Employee").

WITNESSETH:

    WHEREAS,  APPLEBEE'S INTERNATIONAL,  INC. ("Applebee's") is the owner of all
rights  in  and  to a  unique  system  for  the  development  and  operation  of
restaurants (the "System"),  which includes proprietary rights in valuable trade
names,  service  marks and  trademarks,  including  the service mark  Applebee's
Neighborhood  Grill & Bar and variations of such mark, designs and color schemes
for restaurant premises, signs, equipment, procedures and formulae for preparing
food and  beverage  products,  specifications  for  certain  food  and  beverage
products,  inventory methods,  operating methods,  financial control concepts, a
training facility and teaching techniques;

    WHEREAS,   Developer  is  the  owner  of  the  exclusive  right  to  develop
restaurants  franchised by Applebee's  which utilize the System  ("Restaurants")
for the period  and in the  territory  described  in the  Development  Agreement
between Applebee's and Developer (the "Development Agreement"); and

    WHEREAS,  Developer  acknowledges  that Applebee's  information as described
above was developed  over time at great expense,  is not generally  known in the
industry and is beyond  Developer's own present skills and experience,  and that
to develop it itself would be expensive,  time-consuming and difficult,  that it
provides a  competitive  advantage  and will be  valuable  to  Developer  in the
development  of its  business,  and that  gaining  access to it was  therefore a
primary reason why Developer entered into the Development Agreement; and

    WHEREAS, in consideration of Applebee's confidential disclosure to Developer
of these trade  secrets,  Developer  has agreed to be  obligated by the terms of
Development  Agreement to execute, with each employee of Developer who will have
supervisory  authority  over  the  development  or  operation  of more  than one
Restaurant in the Territory  described in the Development  Agreement,  a written
agreement  protecting  Applebee's  trade  secrets and  confidential  information
entrusted to Employee;

    NOW,  THEREFORE,  in  consideration  of the mutual covenants and obligations
contained herein, the parties agree as follows:

    (1)  The parties  acknowledge and agree that Employee is or will be employed
in a supervisory or managerial capacity and in such capacity will have access to
information and materials which  constitute  trade secrets and  confidential and
proprietary  information.  The parties  further  acknowledge  and agree that any
actual or potential  direct or indirect  competitor of Applebee's,  or of any of
its  franchisees,  shall not have access to such trade secrets and  confidential
information.

    (2)  The  parties acknowledge  and agree  that  the  System  includes  trade
secrets and confidential information which Applebee's has  revealed to Developer
in confidence, and that  protection  of  said  trade  secrets  and  confidential
information and protection of Applebee's  against unfair competition from others
who  enjoy  or who  have had  access  to said  trade  secrets  and  confidential
information  are essential for the  maintenance of goodwill and special value of
the System.

                                      E-40
<PAGE>


    (3)  Employee agrees that he or she shall not at any time (i) appropriate or
use the trade secrets  incorporated in the System,  or any portion thereof,  for
use in any business which is not within the System;  (ii) disclose or reveal any
portion of the System to any person  other than to  Developer's  employees as an
incident  of their  training;  (iii)  acquire any right to use, or to license or
franchise the use of any name, mark or other  intellectual  property right which
is or  may  be  granted  by  any  franchise  agreement  between  Applebee's  and
Developer;  or (iv)  communicate,  divulge  or use for the  benefit of any other
person or entity any confidential information,  knowledge or know-how concerning
the  methods  of  development  or  operation  of  a  Restaurant   which  may  be
communicated  to  Employee  or of which  Employee  may be  apprised by virtue of
Employee's  employment by Developer.  Employee  shall divulge such  confidential
information  only to such of Developer's  other employees as must have access to
that  information  in order to operate a Restaurant  or to develop a prospective
site for a Restaurant. Any and information,  knowledge and know-how,  including,
without limitation, drawings, materials, equipment,  specifications,  techniques
and other data,  which Applebee's  designates as  confidential,  shall be deemed
confidential for purposes of this Agreement.

    (4)  Employee further acknowledges and agrees that the Franchise  Operations
Manual  and any  other  materials  or  manuals  provided  or made  available  to
Developer by Applebee's (collectively, the "Manuals"), described in Section 5 of
the applicable franchise agreement between Applebee's and Developer,  are loaned
by  Applebee's to Developer for limited  purposes  only,  remain the property of
Applebee's,  and may not be reproduced, in whole or in part, without the written
consent of Applebee's.

    (5)  Employee agrees to surrender  to  Developer or to  Applebee's  each and
every copy of the  Manuals and any other  information  or material in his or her
possession  or control upon  request,  upon  termination  of  employment or upon
completion  of the use for which said Manuals or other  information  or material
may have been furnished to Employee.

    (6)  The  parties agree  that in the  event of a breach  of this  Agreement,
Applebee's would be irreparably  injured and would be without an adequate remedy
at law. Therefore,  in the event of a breach or a threatened or attempted breach
of any of the  provisions  hereof,  Applebee's  shall be entitled to enforce the
provisions of this  Agreement as a third-party  beneficiary  hereof and shall be
entitled,  in addition to any other  remedies which it may have hereunder at law
or in equity (including the right to terminate the Development Agreement),  to a
temporary and/or permanent  injunction and a decree for specific  performance of
the terms hereof without the necessity of showing  actual or threatened  damage,
and without being required to furnish a bond or other security.

    (7)  If any court or other  tribunal  having jurisdiction  to determine  the
validity or enforceability of this Agreement determines that it would be invalid
or  unenforceable  as  written,  the  provisions  hereof  shall be  deemed to be
modified  or  limited  to such  extent  or in such  manner  necessary  for  such
provisions to be valid and enforceable to the greatest extent possible.

    IN WITNESS  WHEREOF,  the undersigned have entered into this Agreement as of
the date first above written.

DEVELOPER                              EMPLOYEE


By:__________________________________  By:______________________________________
Name:________________________________  Name:____________________________________
Title:_______________________________


                                      E-41
<PAGE>